Thank you Mr. President. I think everyone in this body would agree that we need to provide an adequate safety net for our family farmers.
In recent years however, assistance to farmers has come under increased scrutiny.
The largest corporate farms are reaping the majority of the benefits of the farm payment programs. These payments were originally designed to benefit our small and medium sized farmers but instead have contributed to their very demise.
I believe we need to correct our course and modify the farm programs before those programs cause further concentration and consolidation in agriculture. Today most commodities are valued off demand and the markets dictate profitability.
When farmers overproduce by planting for the farm program, or expand rapidly because of the security of government programs, then the markets are not functioning.
Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices.
Increased land prices and cash rents are driving family farmers and young farmers from a lifestyle they love. For example, Iowa land near my home in New Hartford is selling between $4000 and $6000 an acre. In my home county, the value of an acre is up 64 percent since 2000. Across the state of Iowa, the average land value per acre rose 72 percent in the last 6 years.
The average of typical cash rents per acre in Iowa rose 25 percent in the same time frame. How are family farmers and young farmers going to survive with numbers like these? How are they even going to be able to get into farming to begin with?
I’ve been hearing directly from producers for years what former Secretary Johanns heard in his farm bill forums. Young farmers can’t carry on the tradition of farming because they are financially unable to do so because of high land values and cash rent.
Dr. Neil Harl, a former agricultural economist from Iowa State University came out with a report on this subject. The report states that “the evidence is convincing that a significant portion of the subsidies are being bid into cash rents and capitalized into land values. If investors were to expect less federal funding - or none at all - land values would likely decline, perhaps by as much as 25 percent.”
Last year the Washington Post did a series of articles on the disparity that the farm program supports are causing. They reported that, “the largest farms’ share of agricultural production has climbed from 32 percent to 45 percent while the number of small and medium sized farms has tumbled from 42 percent to 27 percent.”
The law creates a system that is clearly out of balance. We have a system where 10 percent of the farmers get 73 percent of the benefits. And the top 1 percent is getting almost 30 percent of the payments.
Senator Dorgan and I have filed an amendment that I believe will help revitalize that farm economy for young people across this country. This amendment will put a hard cap on farm payments at $250,000. No less importantly, it will close the loopholes that have allowed large operations to evade even the $360,000 limit and as a result, receive benefits far exceeding that.
Another article by the Washington Post from last year outlines the ongoing abuse in the farm support program.
“Farm Program Pays $1.3 billion to People Who Don’t Farm.” We’ve got examples of people who live on land collecting direct payments just because a commodity was once grown on that land. Any agricultural use including having a horse on that land, qualifies them for a direct payment even though they aren’t even growing a crop.
Our bill addresses these problems by doing away with the loopholes that people have abused over the years to continue to get payments. We get rid of the 3-entity rule and we go to a system of direct attribution. Most importantly, we tighten up what “actively engaged” in farming means.
I want to make a very clear distinction here. Some members of the Senate have advocated that the Dorgan-Grassley amendment is not as tough as what the Senate Agriculture Committee did. This is just not true.
We’ve got to compare apples to apples here. Saying that the Committee has a hard cap on payments at $200,000 isn’t accurate. They only have a hard cap on direct payments and counter-cyclical payments. Dorgan-Grassley actually caps those at $100,000. In addition my amendment will cap marketing loan gains at $150,000, while the Committee leaves these UNLIMITED! This actually weakens current law if you can believe it.
I anticipate there will be other votes on other types of reform including means testing also known as the Adjusted Gross Income limit. I want to make sure that my colleagues are aware that an AGI cap and a hard cap on payments are two very different things and each should be looked at and considered individually.
Back in 2002 I voted against the farm bill conference report and a lack of payment limits was one of my reasons. I’ve been fighting to reduce large scale subsidies since I was “Congressman Grassley” back in the late 70’s. Then we were arguing over a $50,000 limitation.
Our amendment produces some considerable savings. Senator Dorgan and I have identified very critical and essential programs to help producers and farmers, small business owners, conservationists, and low-income people including seniors and children.
We support Beginning Farmer and Rancher Programs and the Rural Micro-enterprise Program. These programs are crucial to bolstering young farmers and Main Streets across America.
It will also provide funds for the Organic Cost Share Program and the Farmers Market Promotion Program. These growing components of our food supply system will create new income opportunities for farmers and increase healthy food options for consumers.
A large priority of mine has always been seeing justice for the black farmer’s discrimination case against USDA. This will double the amount provided by the committee for late filers under the Pigford Consent Decree who haven’t gotten a chance for their claims to be heard. It’s time to make these farmers right who were discriminated against in their attempts to farm.
We support the Grassland Reserve Program and the Farmland Protection Program with additional dollars. Conserving our natural resources is one of the most important components of agriculture and this investment will make a substantial difference in the availability of these programs.
Finally, while the Agriculture Committee Bill makes significant contributions to the nutrition and food assistance programs, they weren’t able to go far enough due to tight budget constraints. Dorgan-Grassley adds money so TEFAP can be adjusted for inflation and other nutrition priorities to assist low income seniors and children.
I worked with Senator Dorgan on a similar measure in 2002 and it passed with bi-partisan support by a vote of 66-31. Unfortunately it was stripped out in conference.
You might remember that the last time we had a vote on payment limits was on the budget bill. Many of our colleagues said they agreed with what we were trying to do. But they said that the budget was not the right time, “it needs to be done in the farm bill.”
All of our colleagues who said to wait---here is your chance. Stand with us on real reform. The time is right.
Let me remind this body that the Senate Agriculture Committee set up The Commission on the Application of Payment Limitations for Agriculture. The purpose was to conduct a study on the potential of further payment limitations on farm programs.
The Commission recommended the very same loophole closing measures which we’ve included in this amendment. The report also said the 2007 farm bill is the time for these reforms to be made as part of a change to permanent law. Well, it’s 2007.
By voting in favor of this amendment we can allow young people to get into farming and lessen the dependence of federal subsidies. This will help restore public respectability for federal farm assistance by targeting this assistance to those who need it.
Let’s quit dragging our feet and let’s pass real reform with a real cap for real farmers.
I call upon my colleagues to support this common sense legislation.
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