By Larry Dreiling
The vote on the 2002 farm bill by members of the Kansas Congressional delegation was split 50:50.
Most notably, two Republicans voted opposite positions.
Rep. Jerry Moran voted in favor of the bill. Sen. Pat Roberts voted against it.
"Who is right? The answer is a very professorial one. They are both right," said Dr. Barry Flinchbaugh, Extension state leader for agricultural economics, at Kansas State University.
"Both were in distinctly different circumstances, frankly, and I won't tolerate criticism of either one of them," he added.
Flinchbaugh delivered his answer before about 250 persons, at the 50th anniversary celebration of the Kansas Association of Wheat Growers, held at KSU's Agricultural Research Center, at Hays.
Flinchbaugh said he has watched farm bill debates since 1968 and without doubt this was the most raw, political, farm bill debate he had ever watched.
"I don't know any other farm bill debate that could hold a candle to this one for raw politics," he said, explaining that this debate also lacked an opportunity for Kansas lawmakers to wield their power.
"When the farm bill passed in 1996, Roberts was chairman of the House Agriculture Committee, Bob Dole was the Senate majority leader and Dan Glickman was secretary of agriculture. It doesn't get any better than that," Flinchbaugh said. "That angered the Texans, and now we have cotton's revenge."
Flinchbaugh singled out two Texans, House Agriculture Committee Chairman Larry Combest and the committee's ranking minority member, Charles Stenholm, for his wrath.
"Moran was on the conference committee, the junior member. Moran was not the chairman. The chairman is a tenacious, tough Texan from cotton country. I have always followed the rule, 'Thou shalt not speak ill of a Kansas politician,' but that doesn't apply to Texans.
"The chairman of the House committee is from cotton country, as is the ranking minority member. They wrote a cotton bill. You look at the direct payment for cotton, and you compare it to the maximum counter cyclical payment for wheat, it is doubled. That is the power of the chairmanship. There is absolutely no substitute for having the chairman from your district, and that takes seniority. So, I have some advice for the congressman (Moran): It is time to lose hair (a reference to Roberts' bald pate.).
"Combest was hell-bent on ending Freedom to Farm a year early. He was one of the original 'Gang of Four' Republicans who voted against Freedom to Farm and it cost him the chairmanship for two years. He intended to end Freedom to Farm a year early and he got it done. That is the battle your congressman faced," Flinchbaugh said.
The 1996 farm bill, Flinchbaugh said, featured benefits for wheat and corn growers, whereas the 2002 bill offers more benefits to cotton and dairy producers.
The fate of this farm bill was decided the day Sen. Jim Jeffords (a former Republican from Vermont) became an Independent and made Sen. Tom Daschle of South Dakota the majority leader. "The payoff was big-time. If there are any dairy farmers in the audience, you should be shocked to know your farm program is determined by the price of milk in Boston, MA. If that makes any economic sense, I went to the wrong school.
"Now, $16.94 is the trigger price of milk for the whole country, based on the Boston price. I simply cannot explain that in economics. For the first 2.4 million pounds, production from 125 to 140 cows now has a counter cyclical payment based on that $16.94. Right now, that is about 50 cents per hundredweight.
"The nation's lawyers and accountants now are busy figuring out how to reconstitute dairy farms, so that we have 140-cow dairy farms. If you don't know how to do that, hire an Enron attorney and an Anderson accountant. They are cheap, because they are unemployed," Flinchbaugh said.
Meanwhile, Roberts, along with Sen. Thad Cochran, R-MS, offered an alternative bill that had a larger direct payment.
"It was rather shocking. It would have put more money in your pocket and was more market oriented. Mr. Jeffords took care of that for his dairy farmers and not for wheat farmers," Flinchbaugh said.
One bright spot for Kansas producers, the economist said, was Moran worked as a House-Senate conferee to equalize loan rates between grain sorghum and corn.
"There is an old term in the political world called 'exacting a pound of flesh.' I would say Moran got the pound of flesh when he got grain sorghum on a par with corn. That was important to Kansas and that was no small task," said Flinchbaugh, who chaired the Commission on 21st Century Production Agriculture.
He also refuted Combest's assertions following the passage of the new farm bill that the essence of Freedom to Farm was eliminated.
"In the commission I chaired, we heard two things: Preserve production flexibility and replace emergency supplemental payments with an entitlement. This bill accomplishes that," Flinchbaugh said.
"The No. 1 premise of (the new farm bill is the highlight of Freedom to Farm), that is, production flexibility. No politician in Washington had the guts to touch it. It is alive and well.
"The No. 2 premise is to continue a direct payment. They changed the name. They once called it a market transition payment or fixed payment. What did they do? They expanded it, and brought it oilseeds. So, Freedom to Farm is alive and well.
"The third premise is that it locks in a counter cyclical payment. We do not need to go to Congress every year for emergency supplementals," Flinchbaugh said.
He then leveled an attack on Iowa's senators, Tom Harkin, ranking Democrat on the Senate Agriculture Committee, and Republican Charles Grassley, who both voted against the bill.
"Senator Grassley said my commission was worthless, but he is from Iowa," Flinchbaugh said. "The two things we recommended are in here, not exactly like we recommended them, but they are there. You got some flexibility and a counter cyclical payment.
"This farm bill also allows you to update your base and your yield. As we traveled the country, young farmers kept coming up to us asking for that. They needed it, they wanted it and they got it. That is especially important since flexibility changed the crop mixes in this country.
"Last, we didn't fall for Mr. Harkin's and Mr. Grassley's payment limitation crap and the Environmental Working Group had zero influence on the payment limitation, which, by the way, I predicted would happen the day they released that.
"I have been watching farm bills since 1968, and that stuff is not new. I'm convinced our friends in Iowa and east of there have no idea about the acreage and the production it takes to survive on the High Plains."
Flinchbaugh said the bill is the most conservation minded farm bill in history, increasing conservation programs by 80%. For example, more will be spent on the Environmental Quality Improvement Program in one year than was spent in the previous six years. The Conservation Reserve Program will be increased to 39.2 million acres.
"Then there is Mr. Harkin's Conservation Security Program. I know as much about it as Moran does, and I'm surprised if he knows about as much about it as Harkin does," Flinchbaugh said. "Basically, if you address an environmental issue on part of your farm, you are eligible for up to $25,000 a year. You address an issue on your entire farm; you are eligible for up to $35,000 a year.
"Now, I will quote Senator Roberts and say, 'If you are a tree-hugger, and that is difficult to do in western Kansas, and address all the environmental issues on your farm, you are eligible for up to $45,000.''
Flinchbaugh also accused the city-based media of misrepresenting spending levels in the farm bill.
"This bill set many records. It is the most complicated, most political, most misrepresented in the media, but not the most money," Flinchbaugh said. "In 1986, we spent $26 billion on farm programs. In today's dollars, this bill has less spending in it than that. Contrary to what you have been reading, this is not a 90% increase. The press simply is wrong.
"I talked to a reporter from the Lawrence Journal-World who said, 'This is a boondoggle. This is a 90% increase for those wealthy farmers out in western Kansas.' I had to educate him. We spent $32 billion on farm programs in 2000. We will spend $19 billion in 2002. I said, 'How is that a 90% increase. That must be KU math.'
"Let's set the record straight. Congress operated from a $100 billion baseline over the last 10 years. Latest estimates show this adds $90 billion to that $100 billion baseline. That is a 90% increase. That is what you print in The New York Times and The Washington Post.
"That baseline does not add the emergency supplemental payments (given to producers over the last few years). By the way, Mr. Roberts had one of those ready to go that would have provided a 59-cent per bushel payment for wheat farmers this September.
"At best, this is flat funding. It is clearly a cut for this year. There will be no supplemental in September. There will be a six-cent additional direct payment in October. Remember, you got a fixed payment at the end of last year for this year's crop. This bill adds six cents to that.
"The maximum counter cyclical payment you can get is 54 cents, but you only will get 35% of that in October. That is 19 cents. That is KSU math, and it is accurate. You were expecting 50 cents and you are going to get a quarter," Flinchbaugh said.
Another member of the Senate that Flinchbaugh took on was Sen. Kent Conrad, D-ND, who was the primary proponent of a marketing loan among farm bill conferees. The economist blasted the new bill's lack of loan deficiency payments or payments for market losses.
"Why our friends from the Dakotas are so in love with a marketing loan is beyond my imagination, but then they sent Daschle and Conrad to the Senate, so that makes my point.
"That increase in the marketing loan that Harkin and Daschle and all the others talk about is not worth a tinker's damn between here (Hays) and Denver. I don't care if it is $4. Yes, the loan jumped from $2.58 to $2.80, with no MLP and no LDP.
"This love affair with the marketing loan makes little economic sense. It is just that simple. So, there will be no supplemental this fall and no LDP, if you plow under that crop," he said.
Another fault Flinchbaugh finds with the new farm bill is that it has production-distorting effects and may be found to be improper under World Trade Organization rules.
"This bill is less market oriented. It is a step back," Flinchbaugh said. "It is a copy, frankly, of the 1990 farm bill. President George Bush said when he signed that bill that it would not increase production. I told a reporter then, they don't teach ag economics, at Yale. Like that bill, this bill will increase production over the long haul, because it provides price incentives.
"What about our WTO commitments under the new farm bill? I hear in the coffee shop people saying, 'To hell with the WTO.' The wheat industry is export dependent. Period. Any wheat farmer who says to hell with the WTO doesn't know where babies come from.
"What has amazed me about the reaction to this farm bill is that the Europeans, the Canadians and the Aussies don't like it. They are crying foul. That is absolutely laughable.
"They think this bill has trade distortion? They are the masters of trade distortion. That is why they don't like it.
"I think they recognize this bill provides us with a metal bat to hit them over the head. We can play their game, too. I suspect they will be more serious, at the WTO.
"We economists calculate something called production subsidy equivalent, or PSE. It measures the degree of subsidization around the world. For the year 2000, our PSE is 22 and the Europeans are criticizing us, while their PSE is 38, or 73% higher than ours. We are pikers.
"Having said that, this bill is more trade distorting. Our direct payment is in the green box. Green means go, it means a minimal amount of trade distortion. Then, the marketing loan is clearly in the amber box. It is market distorting and we have increased it.
"We have this new counter cyclical program. The commission suggested we tie it to an income index, so that we had a chance of it going into the green box. We tied it to the old target price, even though we decoupled it to make it less amber and more green, but it was not enough.
"We have a $19.1 billion limit to what we can spend in the amber box. Our European friends, who are raising cane about that, have a $62 billion limit. Again, we are pikers," he said.
That leads Flinchbaugh to believe, if low commodity prices continue, amber box payments will exceed their $19.1 billion limit over the next six years of the bill. This could lead to a new farm bill debate coming earlier than the life of the legislation.
"Added into the bill is a little proviso, that if the secretary determines we are going to exceed this limit, she shall lower payments," Flinchbaugh said.
The economist said the U.S. Department of Agriculture is making producers do their homework and make the right choices in the selection of changes to their operations.
"Another name for this bill could be 'Decisions, Decisions, Decisions.' Are you going to update bases? If so, you have to update yields," Flinchbaugh said.
"Which marketing loan are you going to use? Are you going to be cautious and maximize that guarantee or are you going to bet on how large that counter cyclical is going to be? You must make the same decisions for each commodity on your farm, but if you have two or three farm numbers, you don't have to make the same decision across the farms," he said.
Flinchbaugh said KSU Research and Extension, the Farm Service Agency and the Kansas Farm Bureau likely would be involved in county meetings to offer decision-making tools to producers. He said producers should exercise caution in making decisions, since they will be locked in for six years.
"I am going to plead with you. When you go into the FSA office, for God's sake, be nice to those people," Flinchbaugh said. "They have an unbelievable task ahead of them. They got to get the first checks out in October--surprise, surprise, surprise--before Nov. 5 (Election Day).
"Frankly, if the leadership were not so bent on ending the 1996 farm bill a year early and passed the very same bill at the very same time to make it effective in 2003, so that we would have time to figure it out and implement it with due diligence, I would be less upset with it.
"Many people aren't going to be happy campers after they have been camping out at the FSA office and then discover they only are going to get 35% of this counter cyclical payment this year. I must tell you, I am concerned that this year is going to test your skills, because of the drought. We are going to have cash flow problems this year," he said.
Still, Flinchbaugh insists he is an eternal optimist, when it comes to producers' ability to survive, to handle whatever comes their way. He complimented KAWG on its 50th anniversary.
"You have chosen a tough occupation. It requires great skill," Flinchbaugh said. "I tell you, when you make me the most angry is when I go into a coffee shop, in this state, and hear someone say, 'I'm just a farmer.' I want to choke you. You happen to be an agronomist, an animal scientist, a marketer, a risk manager and, yes, a political junkie. That is what this group is all about."