Senate Agriculture Committee Opens Under Harkin

June 29, 2001

Senate Agriculture Committee Chairman Tom Harkin (D-IA) wielded the gavel for his first full committee hearing as chairman Thursday, hearing testimony on what shape the next farm bill should take. He promised a "busy schedule of hearings" over the next several weeks "to cover in more depth the many issues in the various parts of a comprehensive farm bill."

Harkin added, "Fundamentally, we must seek to help agricultural producers earn a better return and a better share of the consumer dollar in the market. That applies to corn, soybean, wheat, cotton and rice producers, just as it does to pork, beef, dairy, poultry or specialty crop producers. We also must help rural communities share in the economic growth, job creation and prosperity that our nation, in general, has enjoyed over the years.

He cautioned that a "heavy reliance on government payments is not a healthy or sustainable agricultural policy on into the future. Again, we must look to creating opportunities and hope for the future, not just a continuation of the status quo." He said conservation "should be a crucial part of our work. We must start by adequately funding and strengthening our existing USDA conservation programs, but we can do more."

Harkin also gave some hints on another topic he believes Congress should consider: developing farm-based sources of renewable energy -- ethanol, biodiesel, biomass, wind, methane, hydrogen. "Anything we can produce from a barrel of oil, we can also produce on our farms. We do not have to drill for oil in environmentally pristine areas, nor do we have to be at the mercy of foreign oil producers. The potential is huge all around the country: ethanol from grains or biomass of various kinds; biodiesel from soybeans or any kind of oilseeds or even from animal byproducts."

American Farm Bureau Federation President Bob Stallman told the committee Congress should focus on farm opportunities rather than farm problems. Investments in conservation, research, export promotion activities and technologies to derive energy from farm-grown commodities help bridge the gap between where agriculture is today and where the sector wants to be in the future.

Stallman said that the income support should be consistent with international trade obligations and cautioned against any reduction in payment levels. "Government payments have provided a substantial portion of farm income over the past three years," Stallman said. "A decrease in those payments now would be very detrimental to farm income and would begin to undermine the financial balance sheet of the farm sector."

AFBF urged the committee to continue production flexibility contract payments to current contract holders and increase the $4 billion baseline by $500 million to allow oilseed production to be eligible for a contract; rebalance loan rates; implement a new counter-cyclical income support program to supplement revenue insurance products; oppose a return to supply management programs or targeting benefits; extend the dairy price support program; create a non-recourse wool and mohair marketing loan program; provide a $2 billion increase for conservation stewardship; develop a workable peanut program and rebalance the sugar loan rate.

Leland Swenson, president of the National Farmers Union (NFU), said NUF recommendations represent a substantive departure from current policy "in that we eliminate de-coupled payments (AMTA contract payments). Our counter-cyclical approach to economic assistance is based on an improved commodity marketing loan program and does not include other "supplemental income assistance programs". Additional components to this policy include limited commodity reserve programs and discretionary set-aside authority.

Swenson added, "It is our goal that new farm policy provide a non-recourse commodity loan program that yields a return to producers equal to the full economic cost of production. The national average commodity marketing assistance loan rate for each eligible commodity should be annually established at the highest possible level and not less than 80% of the three year moving average of the full economic cost of production per unit per planted acre as calculated by the Economic Research Service utilizing the most recently available data."

NFU also supports a national renewable fuels standard as a component of a broader U.S. energy strategy. "If implemented, demand growth for ethanol, bio-diesel, etc. is projected to more than triple over 10 years. We believe such a shift in demand would necessitate a corresponding increase in the size of the renewable energy reserve that is not included in our projections. While the potential growth in demand will improve the price expectations for crop producers, the impact of increased feed grain and oilseed meal prices on U.S. livestock producers will be significantly less than one might expect due to the residual feed products produced by the bio-energy industry."

The Conservation Reserve Program enrollment limit should be increased to "at least" 40 million acres with compensation rates comparable to local rental rates, Swensen said.