Editors note: The following are excerpts of remarks by Sen. Pat Roberts, R-KS, before the 2000 wheat Industry Conference and Expo, on Feb. 11, in Las Vegas, NV. Roberts received NAWG's inaugural wheat Man of the Year Award during a banquet held to celebrate NAWG's 50th anniversary.
Thank you for those kind words and introduction, and thank you for naming me your wheat Leader of the Year. It is indeed an honor and a privilege to receive this award from you, our nation's wheat producers.
Frank Carlson, the only man to serve our State of Kansas as a congressman, senator, and governor, and one of my political and public service Godfathers was fond of saying:
"There are no self-made men or women in public office, it is your friends who make you what you are."
In this regard, I want you to know that whatever success we have had in Washington over the years is due in large part to support from the Kansas and National Association of wheat Growers. I particularly want to thank your Washington Representative, Wayne Hammon, for all the frank, honest advice and counsel he has provided to myself and other members of the Ag Posse.
We have all been together on many long agricultural policy trail rides throughout the years, and that is why it is particularly special to be here today to receive this award during your 50th anniversary as a national association working for the betterment of wheat producers and rural America. Again, thank you for all you do on behalf of American agriculture.
I know that these past few years have not been easy for us. And, let me say that while I know we do not all always agree on the policy directions we should take, I do want you to know that those of us in Washington hear your concerns and take them seriously.
There has been quite a bit of debate recently in Washington on what is the cause of the low prices we have been experiencing. And, some have indeed liked to blame the 1996 Farm Bill. While a look back down the trail is always helpful, it is more important to make sure we take the right trail ahead. I am sure there will continue to be more than enough debate for supporters and detractors of the 1996 Farm Bill regarding what we should have done and could have done.
But, I think we should focus on where we stand in the macro, world of issues that effect our daily lives and farming operations and where we are headed.
Having said that, I must first ask, where we would be today in terms of excess stocks and prices if we did not have the flexibility-the true goal of Freedom to Farm to return decision making to producers-provided under the 1996 Farm Bill and were planting the same level of wheat acreage today as we planted in 1996?
Nationally, wheat acreage is down over 20 percent in the past three years. In Kansas producers planted 11.8 million acres of wheat in 1996, 11.4 million acres in 1997, 10.7 million acres in 1998, 10 million acres in 1999, and a projected 9.8 million acres for the 2000 crop. At the same time our yields have gone up.
And for those who say we've been planting fence row-to-fence row since 1996, consider the following:
--In 1998, total U.S. planted acres in the six major crops were only 5 percent higher than in 1995-the last year of the old farm bill and set-asides.
This is not to say everything is perfect. Times have been tough and Congress will provide an additional assistance package this year.
In regards to additional assistance this year, I must comment on the Clinton Administration's recent farm assistance proposal. Secretary Glickman is an old friend, but I must tell you that this proposal does not pass the common sense-production agriculture smell test.
--First, the amount is paltry compared to what most in Congress expect will be provided this year.
--Second, it appears to be coupled to production, but we're not really sure because we still haven't seen all the details from USDA.
--Third, it is not clear if it assists producers who had no crop to harvest due to crop failures.
--Fourth, it says that it is "OK" to be a big farmer or a small farmer, but if you are a "farmer, farmer" you're in trouble.
With the $30,000 combined payment limit, the largest producers will still receive their $40,000. The small producer who lives and works in town and farms a quarter section on the weekends will get the full payment. But, if you are a producer farming between 500 and 1500 acres who is trying to farm full time and who may also work full-time in town to keep your head above water, you very well may hit the payment limit. In other words, if you are a medium size farmer you get nailed. That's not fair-And, once again, we see the folly of Washington trying to define a family farmer.
The Administration's plan may be popular with some social engineer at OMB or USDA, but it is not popular with Republicans or Democrats, is unfair to farmers, and WILL NOT be passed into law by this Congress. But, Congress will take action to assist producers again this year.
The lead of a story this past summer said, "In the wake of dismal prairie farm income projections, agriculture officials emphasized the need for an improved long term safety net. If something is not done we are going to lose a lot of farmers."
Many of you probably agree. But, I should tell you that the story was not about the U.S. Rather, it was about Canada and their farm crisis. Canadian farmers are facing bleak prospects and the same is true in Great Britain and in Europe. What we have experienced is a world-wide market decline.
That underscores the fact that regardless of what some may claim, we are now producing crops for the world market place. When the world market is prosperous, so are our commodity prices. But, when things head south in the world market, our commodity prices follow suit.
The hand we have been dealt in the past three years is unprecedented. What have we had to deal with? Consider:
--First, farmers world wide have had good growing weather and produced record crops for three years in a row. Unprecedented.
--Second, we have experienced a world depression in regard to our export markets both in Asia and Latin and South America.
--Third, the European Union is now spending a record $60 billion on agriculture subsidies.
--Fourth, currency exchange rates reduced the level of farm exports and farm prices. One study this past summer reported that a 16% appreciation in the value of the U.S. dollar has been responsible for 17 to 25 percentage points of the decline in corn and wheat prices.
--Fifth, a market oriented farm program depends on an aggressive trade policy and in regard to trade:
--We did not do fast track.
--We had a historic agreement with China and then it was pulled back followed by the bombing of the Chinese Embassy.
--We did not achieve true sanctions reforms.
During the past three years, in addition to low crop prices, we have also suffered through periods of low prices for cattle, hogs, gold, oil and gas and all raw commodities-none of these have ever been covered by a farm bill-any farm bill, yet we suffered through low prices in all.
What does this tell us?
Regardless of what our domestic farm policy is, all of our raw commodities are increasingly intertwined with world markets and U.S. access to those markets. And, without the tools to gain access to these markets and the proper domestic tools to deal with the ups and downs associated with the world market, it will be difficult to compete and survive.
So, domestically, we must not focus only on the underlying farm program policy-whatever it may be-but also the additional tools that must go hand-in-hand with it to make it work. Add these to the proper trade and export policies, and "yes", we can have a profitable agriculture.
Additional short-term assistance will be important again this year. But, we must also continue to focus on passing and achieving those policies that will make us profitable in the long-term.
Tonight, I am proposing a platform consisting of both domestic and international planks that I believe we must work to pass this year.
On the domestic policy side we must:
--Quickly approve an agricultural assistance package including a 100 percent bonus AMTA payment-let's try to get in the budget so that agriculture is not accused of stealing from social security and given that black eye;
--Pass real crop insurance reforms that do not undermine the program;
--Provide Tax relief including FARRM Accounts, capital gains, and estate taxes; Common sense regulatory relief including implementation of the FQPA using sound scientific principles.
We have the Freedom to Farm, but we do not have the "Freedom to Market." We must push for:
--Passage of permanent PNTR for China
--Real Sanctions Reform
--Approval of Fast Track so that our South American neighbors can negotiate agreements with the U.S. instead of our European competitors.
We should be able to pass many of these initiatives. Crop insurance reforms, common sense implementation of FQPA, FARRM savings accounts, China PNTR, and sanctions reform have broad bipartisan support among rural Representatives and Senators. But, past history, including last year, has shown us that this will not be easy.
Consider these events from the past year:
WTO-The Seattle talks were a failure with the President pandering to labor and environmental groups, upsetting every developing country in the organization, and cutting the legs out from under his own negotiators.
Fast track-Our trade negotiators cannot negotiate viable trade agreements without fast track trade negotiating authority. But when push came to shove, the Clinton Administration refused to provide the extra effort needed to get the final, small number of votes needed for passage. And, some in the Republican Congress pushed and shoved the wrong way as well.
Sanctions-After a long, continued fight-a bipartisan coalition worked with the Clinton Administration granted a long-sought waiver to allow grain sales to sanctioned countries. But, the Administration refused to allow USDA to use GSM financing to make these sales. Thus, the policy change is virtually useless. Secretary Glickman supports this change, but someone named Eizenstat does not. So, while we sit on our hands in regard to the use of the GSM program the EU, Canada, and Australia get these sales.
In August, the Senate voted 70 to 28 to approved an amendment on the Agriculture appropriations Bill that would have exempted sales of food and medicine from all sanctions and embargo policies, including those on Cuba. The provision was killed in conference this time by the House Republican leadership for ideological reasons (Cuba).
It is time for President Clinton, and both Republicans and Democrats in the Congress, to set aside their special interest, isolationist, protectionist and moral police views and enact trade initiatives that enable U.S. agriculture to be successful in the world market and used as a tool for peace.
When one in three acres of U.S. farmland is used to grow crops for export, you can't have a market oriented farm policy if you don't have the tools necessary to be competitive in the world market.
Producers have repeatedly told us they need an improved crop insurance program.
In the past 18 months, Senator Bob Kerrey (D-NE) and I have asked virtually every commodity and farm organization to provide their recommendations for improving the crop insurance program. We also worked with our colleagues on the budget committee to obtain $6 billion over the next four years to make these reforms.
Senator Kerrey and I took the recommendations we received and worked with our colleagues to introduce, The Risk Management for the 21st Century Act. This bill addresses the concerns of grain, cotton, and specialty crop producers throughout the U.S. It has the bi-partisan support of a majority of the Senate Agriculture Committee and 26 members of the full Senate. And, a similar bill passed the House of Representatives without a dissenting vote. The House cannot even decide when to adjourn, but they passed a crop insurance bill unanimously. Yet, this issue is stalled in the Senate.
Some have proposed taking the $6 billion provided for crop insurance reform and instead use it to make direct payments to producers of all insurable crops. This would provide direct payments to producers of nearly 100 crops, while ignoring the producers of nearly 200 crops that are not insurable. A majority of the Senate Agriculture Committee believes this approach is wrong. Despite the majority support for the Roberts/Kerrey legislation, the Agriculture Committee could not move crop insurance reform legislation last year. We have been promised a mark-up by March 8. We continue to try and work out our differences, but if we can't get it done-fasten your seat belts.
We passed a tax bill last year that included further relief from capital gains and estate taxes. The bill also included FARRM savings accounts-perhaps the single most important tax/risk management tool we can give to producers. But, the legislation was vetoed by President Clinton.
In 1996, we promised farmers regulatory relief. We even passed the Food Quality and Protection Act (FQPA) that was supposed to assist in this effort. But, EPA's administration of the FQPA has made it anything but relief.
I am a lead sponsor of the Regulatory Openness and Fairness Act which will require EPA to use sound science when administering the FQPA. The bill has the bi-partisan support of 30 members of the Senate, nearly 200 members of the House, and virtually every farm and agribusiness organization in the country. We must hold hearings on this issue and move this long overdue bill.
I am deeply disappointed by our failure to deliver on these important trade, crop insurance, tax and regulatory initiatives.
These failed promises, a global depression, and a lack of a consistent and aggressive export policy have led to two consecutive bailout packages of $6 billion and $8.7 billion. And, to be quite honest, these bailouts have left many members of Congress asking, "What in the world is going on here?"
If we continue to ignore these initiatives, what will our options be? We can fulfill our promises and provide farmers and ranchers the tools by which they can be competitive in the world marketplace or we can look at other alternatives.
Higher Loan Rates
Will we raise the loan rate? If we do this, how do we pay for it? Are producers and lenders willing to give up guaranteed AMTA payments as an offset?
Would this lead to increased stocks and thus actually lower prices for an extended period of time? Do we then raise or extend loan rates again, creating an endless cycle?
Given increased production throughout the world, do we really want to go back to the days of the loan rate floor becoming a ceiling from which our competitors recapture market share? Is the loan rate supposed to be a tool for income protection or a market clearing device?
Finally, how do higher loan rates help producers with no crop?
Should we implement set-asides? Do producers want to stand in line at the FSA office to certify they have set-aside the proper allocation of land?
I remember when we implemented past set-asides. As the U.S. set-aside land our competitors increased their production. Case and point, soybean production in the 1980s. We reduced planted acres and South America increased theirs by an almost identical amount.
To those who argue that we have world grain supplies that are too large and thus we must implement set-asides, I ask the following questions:
How do we plan to feed a growing world population in the next 30 to 40 years?
Remember the 1972 to 1974 period where we were told the world faced a possible food shortage? Remember the 1974 World Food Conference in Rome to address this issue?
It was only three years ago when we again had many experts telling us that world food supplies were becoming dangerously short and a world food crisis could be looming.
How many crop failures are we away from being in a similar situation? Does anyone really want to go back to set-asides?
Some suggest the re-establishment of a farmer-owned reserve (FOR). I remember back in the 1980s when a large amount of grain in the FOR put a cap on the corn market for nearly two years. Do we want to put another artificial cap on the grain markets? Do we want USDA to get back into the grain storage business?
NAWG and other farm organizations are seriously considering a counter-cyclical payment of some form. I applaud you for this, and I believe these ideas will become the foundation of debate for the next farm bill. However, the legislative session is short this year, the ideas are many, and in the end payments will most likely be distributed through the AMTA payment mechanism again this year.
We cannot rely on exports to solve all our problems, we can't put all our eggs into one basket. Thus, I remind you that we already have one form of counter-cyclical payment-Loan Deficiency Payments-which in truth are based on price. Farmers will receive at least $5.5 billion in LDPs-that's a pretty big egg-on 1999 crops. But, as we all know, price is not the true measure of financial stability in farm country. The real measure is farm income. Should we develop a counter-cyclical payment that is somehow based upon aggregate farm income, as some have suggested?
I do not believe we should develop a system that is coupled to price and/or production, thus distorting the market. But, if we can develop a counter-cyclical option that is WTO legal and non-marketing distorting, I believe it will and should receive serious consideration.
We need to understand that all of the policy issues I have discussed must be addressed with action and decisions occurring. The question is, "Which way will we decide to go?" Which way will the Ag Posse ride?
These are not questions that will be answered by Congress alone. Farm commodity groups, agribusiness associations and farmers themselves must play a major role.
We cannot afford further internal strife and conflicting goals in the Ag community. Farm organizations no longer can ignore tough policy decisions with the quick fix of annual spending packages.
The job ahead is not about who can outbid who in the appropriations process, as, quite frankly, many farm groups in Washington did the last two years.
We will need every ounce of unity and effort we can mustier if we are to answer these difficult questions favorably for American agriculture.
I will leave you today with those warnings and that plea for help.
In spite of the difficulties, I leave you in optimism.
Together over two decades we have achieved good things for agriculture.
Together in the new millennium we will achieve good things again.
The Ag Posse is saddled up and ready to ride.