[Page: H6036]
---

   The SPEAKER pro tempore (Mr. Flake). Under the Speaker's announced policy of January 3, 2001, the gentleman from Nebraska (Mr. Osborne) is recognized for 60 minutes as the designee of the majority leader.

   Mr. OSBORNE. Mr. Speaker, during the past 30 days of working recess, the number one topic in my part of the country has been the drought, and I would like to display a map of the drought as was portrayed at the end of August.

   Note here that roughly 45 percent of the country is in an extreme drought. The area that is brown is so excessive that there is practically nothing growing. Pastures are burned up, no dry-land crops, and even irrigated crops have a hard time surviving. The red area is a little better. Again, very little can grow there because the rainfall has been probably less than 50 percent of normal, and we have even seen some of this on the east coast. So very, very few times in the history of our Nation have we had a drought that is this

[Page: H6037]

   The other thing that has been remarkable is not just the extent of it, but the severity of it. As I mentioned, we have a huge proportion of the country that is in extreme drought condition. Most years you might have a very small percentage that would have that type of drought. The other thing to mention is that this has been a very persistent drought. Many of these areas are currently in their 3rd or 4th year of drought conditions, and so when a farmer or rancher has had to go through multiple years, obviously he becomes even more distressed than if it was just a 1-year occasion.

   So the situation is dire. Some type of help is needed, some type of disaster assistance. And the one thing I would like to point out is that in recent farm bills we have had what is called emergency assistance and in the last 3 or 4, 5 years we have averaged somewhere between 6 and $7 billion in emergency spending. That emergency spending has been primarily due to low prices, the fact that no one can get an adequate return on their crop.

   What we are talking about now is not low prices. We are talking about no crop at all, and we are also talking about really dire circumstances for the livestock producers because in these areas where there is no pasture, what has happened is that a great many people who own cattle, and in some cases even hogs, they have had to sell off their herds because there is nothing to feed them; and most of their feed for the winter has already been used up as well.

   So because of the glut on the cattle market, and in some cases the hog market, what we are finding is terribly low prices; and people are losing tremendous amounts of money, and a great number of cow/calf operations will be simply driven outside of existence because of this and of course a great many farmers as well. So this is a very difficult situation and one would assume that under these circumstances, it would be almost automatic that we would be able to come up with some type of assistance because the economic impact here will be much greater than the wildfires that we have seen in the West; and of course those were very serious and we certainly needed some aid, and we gave $700 million very quickly to provide assistance for the damage that was accorded to those wildfires; and yet here just in my State alone we are talking about roughly $1.4 billion, State of Nebraska, and we would multiply that by 10 or 15 when we look at this larger region. So the damage is tremendous.

   What we notice is that if we have a hurricane such as we had down in southern Florida a few years ago or if we had a tornado or a wildfire or even 9-11, the events are very dramatic. We see destruction, we see television 30-second soundbytes, and in a drought it is more insidious. It is slower, but the economic impact is every bit as great, if not greater than some of these other situations that we have addressed with disaster assistance. So, anyway, we feel this is a difficult situation.

   What I would like to do at this point, Mr. Speaker, is to amplify some of the arguments that have to do with why we are having such a difficult time getting the word out here in Congress and getting approval nationally for disaster assistance for agriculture; and the big problem that we have is that there is a widespread belief that the new farm bill that was passed just a few months ago is very fat, that it has all kinds of money in it; and therefore because of the excessive amounts of money in the farm bill, any disaster assistance for agriculture should be covered by the farm bill. And so you might say, well, is this perception correct, this perception that the farm bill is really overloaded with money?

   And I would like to point out just a few newspaper articles that I think pretty much capture the tenor of the time. One major newspaper said this and the headline said ``Farm Welfare'' and went on to say in an editorial ``..... the House voted to slide backwards some 70 years, choosing socialism and abandoning market-based reforms in the Nation's Stalinesque farm policy'' in voting for the new farm bill. Here they are talking about a Stalinesque farm policy which is, of course, totally a socialized system which is absolutely not true.

   The Washington Post said this: ``Cringe for Mr. Bush.'' This was the headline. And the editorial said ``Mr. Bush signed a farm bill that represents a low point in his presidency, a wasteful corporate welfare measure that penalizes taxpayers and the world's poorest people in order to bribe a few voters.'' So the President took some tremendous hits for signing this farm bill and the idea being that this was just done to appease a few farmers to get some votes and it was done at the expense of urban citizens and also the world's poorest countries.

   We will examine the accuracy of this statement in a little bit, but this again captures the tenor of the time. This is essentially how this is perceived in so many quarters, particularly in urban areas.

   The Wall Street Journal went on to say this. The headline was ``The Farm State Pig Out.'' The editorial said, ``That great rooting, snooting noise you hear in the distance, dear taxpayers, is the sound of election-year farm-state politics rolling out of the U.S. Congress. This alone amounts to one of the greatest urban-to-rural wealth transfers in history, a sort of farm bill Great Society.''

   So the gist of this editorial was that it is going to be a huge economic transfer from urban areas to rural areas, kind of a get-rich-quick scheme.

   So let us examine this a little bit in greater detail. Did the President really sell out for the farm vote? Did we really have a tremendous urban-to-rural transfer of wealth? Is the new farm bill obscene, as so many have said?

   I guess what we might do here is look at some figures. We will note here, Mr. Speaker, that under Freedom to Farm in 1999, 2000, and 2001, we spent an average of $24.5 billion a year on agriculture. This year in 2002, under the new farm bill, we are projected to spend $19 billion; in 2003, about $22 billion; then $21 billion, and then $20 billion. It will tail on down from there.

   So what we are saying is, projected for the first 4 years of the new farm bill, we are going to spend less than $21 billion a year on agriculture, whereas in the last years of Freedom to Farm, we spent $24.5 billion. So if that is the case, can we really say that this new farm bill is obscene, it is a sell-out to rural America? Is it something that is irresponsible? Should the President be castigated for signing this bill?

   I think very clearly the answer in this case is no, that this is a responsible piece of legislation. The thing that we will see later on is that actually now we have had enough production and crops are pretty much done in their growing season, and the prices are becoming more and more fixed for this year.

   Actually, this year, in 2002, and we know this is not going to be a projection, the reality is going to be that we are going to spend not $19 billion but we are going to be spending somewhere in the range of $15 billion this year, $14 billion, for the new farm bill; and we will go into the reasons for that.

   Instead of being up here, this bar should be down here. There is some pretty good evidence that leads us to believe that these may not be as high. So, actually, these estimates here may turn out to be a little bit on the high side, and obviously the new farm bill may

   actually prove to be a considerable savings over the old farm bill.

   Let us talk about this a little bit, too. Is the new farm bill a large part of the budget? As we read those editorials and as we hear conversation, we would assume that payments to the farm sector are maybe 10 percent of the total Federal budget; maybe 15, maybe 20, maybe even 25 percent.

   What is it? How much do we spend each year on agriculture? The actual case is that we spend a little bit less than or right at one-half of 1 percent of the Federal budget on farm policy. So out of every $200 of tax money that is spent, roughly $1 goes to the farm economy, $1 out of every $200. So this is not a huge giveaway. This is not something that breaks the Federal budget. I think it is important to realize this.

   Also, I think it is important for people to understand that out of that one-half of 1 percent that goes to the farm bill, the farmers do not receive all of that money. There are school lunch programs, there are conservation issues, there are environmental accounts. So actually the farmer himself

[Page: H6038]

   What do we receive in return for that one-half of 1 percent that we are spending in tax dollars? What we have is the most diverse, the cheapest, and the safest food supply in the world.

   In the United States, we have no foot-and-mouth disease, where many other countries do have that in their livestock herds. We have no mad cow disease, or BSE, in this country. We do not use DDT. We do not use dangerous chemicals in our livestock and in our crops. So for all of this, we have a very safe food supply, we have a very diverse food supply, and we are totally self-sufficient. We do not have to import, although we do import some, but we would not have to import to sustain ourselves.

   Then lastly, I would like to make the point that we spend less than 10 percent of our total income on food. Now, most countries spend much more than that. They spend 15, 20, sometimes 25 or 30 percent of their total income to purchase food. In the United States, we have a cheap food supply that is safe, that is diverse, and is the best in the world. For that, we are spending roughly one-half of 1 percent.

   Another common myth is that farmers are getting rich off of this farm program. Let me just go through a few numbers here. Last year in the State of Nebraska, we lost 1,000 farmers in 1 year. There are not that many to lose anymore. We are down to under 2 million farmers and ranchers in the United States, whereas at one time it was many, many times that.

   In 1987, there were 12,600 farmers under the age of 35 in the State of Nebraska. Ten years later, in 1997, according to the U.S. census figures, the number of farmers under the age of 35 in the State of Nebraska was 5,500, so that is less than half of what we had 10 years before. That is a trend that is seen throughout rural America, not in Nebraska but in all States everywhere.

   So we are running out of young farmers, and we are running out of farmers, period. If it was so lucrative, if this was something that was a get-rich-quick scheme, then we would certainly see more young people coming into it. We would certainly see more people staying in farming and more people in ranching.

   The facts are that this is a very, very difficult profession; and it is very, very hard to make a living in it.

   One of the things that I have noticed in traveling my district is that out of the poorest counties in the United States, the three poorest counties, one, two, and three in ranking, are in my district in Nebraska. These counties are totally rural. They relay totally upon farming and ranching. There are no metropolitan areas, or there is not even a large town in any of these counties. So when we talk about per capita income, we are talking somewhere in the range of $6,000 per person. We can go to inner cities, to any part of the country, and we will find that the poorest counties in per capita income are in rural America. This is not a wealthy situation.

   I think one of the reasons we have this perception of how much of a giveaway the farm bill is is that the Environmental Working Group put up a Web site this past year in which they published the farm payments to all those who received payments over the last 4 years. Naturally, it is the exception that catches our eye.

   A lot has been made about the fact that Scotty Pippen, the professional basketball player, received some farm payments. He probably owned a farm and probably qualified for some farm payments.

[Time: 20:30]

   But the typical farmer, the average person who is in farming and ranching, is not Scottie Pippin. They point out the fact that some people make large amounts of money. And the assumption is if somebody got a $200,000 check or a $300,000 check or a $500,000 check, that that is net profit, that that farmer took that check to the bank and put it away because it was profit.

   Let us take a hypothetical situation here. Let us suppose someone has 2,000 acres of corn, which is a large but not real large farm in our part of the country.

   Let us say the cost of the production for a bushel of corn is $2.20 a bushel, which is about what it is. So by the time you bought your seeds, you bought your fertilizer, you planted, you put on some water if you irrigate, and you bought your machinery and it is about $2.20 a bushel. But in recent years the price that you receive at the marketplace for a bushel of corn is about $1.70 a bushel, some cases more, some cases less.

   So what it means is that the cost of production is about 50 cents higher than what you receive in the marketplace. So if you produce 200 bushels of corn per acre, that means you are losing $100 per acre. If you have 2,000 acres of corn, that means you have lost $200,000 simply in terms of what your cost of production was in comparison to what you receive at the marketplace.

   So if that farmer gets a $200,000 payment, he does not have any net profit. He has not even paid himself a salary. He has nothing left for his family. He has simply covered the cost of production.

   If he is a larger farmer and he has 5,000 acres of corn, he would get a payment of $500,000 under this set of figures to break even. And so what we are seeing here are some false assumptions, the assumption that because someone is getting a payment from the government is that they are getting wealthy, that they are putting that money in the bank, when in actuality many people are not even breaking even with government payments. So this is the thing that I think is important for people to understand.

   Let us take a look at why we need a farm bill. I think this is something that people sometimes do not totally understand and I will try to take a shot at explaining why I think it is important that we do have a farm bill.

   The first reason I will mention that I think is important is that farming is a unique industry and the first thing we might mention is that farming is almost totally weather-dependent. If we think about it, just think of any industry that you can think of and you would be hard-pressed to find one that was almost totally dependent on the weather. So a farmer can plant at the right time. He can put his fertilizer on at the right time. He can do everything right. And if he has a hail storm the day before he harvests, he has nothing. He could be totally wiped out in 20 minutes. Or if he does everything right and he has no rain and he has dry crops, he has got no crop at all. If his irrigation water gets shut off, which happened in many parts of the West this year halfway during the growing season, he makes no crops. So all agriculture is almost totally dependent on the weather.

   Secondly, in agriculture it is almost impossible to control inventory. That may sound like a strange thing to say, but when you plant your crop in the spring you have absolutely no way of knowing what the worldwide production is going to be in the fall. You do not know whether there will a drought in China. You do not know what the production of the United States will be.

   For instance, if we took corn as an example this year when we planted, people assumed that we would have 10 billion bushels of corn as a harvest. But because of the drought we will have less than 9 billion bushels, so no one can control that inventory. If you are making Ford automobiles and you have too many Ford Explorers out there, you simply shut down an assembly line. Instead of operating 24 hours a day, you operate 14 hours a day. If you are making suits of clothes and there are too many in the store and you cannot sell them, you simply cut down the production. But in farming there is no way in the spring that you can control inventory because you do not know what is going to happen during the growing season. So inventory is impossible to control.

   A third factor is producers do not set the price. In farming, interestingly enough, you do not say, well, I am going to charge $2.50 per bushel of corn. You go down to the elevator and you say, What will you give me? If the elevator operator says, We will give you $1.90, that is what you get. If they say $1.70, that is what you get. But in almost every other industry, if you are manufacturing an automobile, if you put a sticker on there of $25,000, if you make a suit of clothes, it is $400, $500,

[Page: H6039]

   Fourthly, farming is critical to national security. We have to have a food supply. If you do not have a food supply, you are in bad shape. Let me give you an example of how this can work. About 15, 20 years ago in the petroleum industry we found that we could get petroleum from OPEC for roughly $10 a barrel, $10, $12 a barrel and it was costing us about double that amount to produce petroleum here in the United States. So we said, okay, we will take you up on this, OPEC, we will buy from you. And as a result we began to shut down our exploration. We shut down some of our refineries, some of the pipelines, and we began to reduce our production and we farmed our petroleum industry overseas. And now we find that we were roughly 60 percent dependent on foreign oil. Much of that is from OPEC. And, of course, we are very concerned because we are so dependent on countries that are so volatile and many of whom do not like us. And so the situation can be very similar in farming.

   If we do not have a farm program, if we do not support our farmers in some way, very quickly much of our agriculture will be sent overseas. And that $10, $12 a barrel that we paid OPEC for the last 10 or 12 years is now in the 20s. And furthermore, many people have estimated that when you figure out the cost of the Gulf War, which was basically over oil, maintaining a fleet in the Gulf, maintaining a military presence in the Middle East because of oil, that our actual cost of oil has not been $10 a barrel, it has not been $20 a barrel, it has been somewhere between 70 and $100 a barrel. That is what we have actually spent on our oil supply to keep it safe and keep it coming to the United States.

   Now that can happen very quickly to agriculture. If you do not support your farmers, if you let all of our farmers fail, it is not long before our food supply goes overseas and then you are at the mercy of other people for your food supply. We cannot afford to do this. This is a national security issue to some degree which many people do not think about because we assume every time we go to the grocery store you will have what you need. So you take it for granted, but it is not something we can take for granted.

   Fifth, there is no level playing field worldwide. It is important to understand this: The European Union has been very critical of our farm policy. They do not like us having any type of farm support. Yet in the European Union they subsidize their agriculture roughly $300 per acre; $300 per acre in the European Union. Japan subsidizes their agriculture more than $1,000 per acre.

   In the United States with our farm program we would subsidize our agriculture roughly $45 per acre which is one-sixth of the European Union and, of course, much, much less than what Japan subsidizes their agriculture. And so just to maintain some type of parity, we have to have some type of farm program, some type of price support so we can be competitive with these other countries.

   Also I think it is important to understand that land, labor and production costs vary widely worldwide. I was in Brazil in January. It is very interesting, you can buy topflight soil down there, topflight land, the topsoil is 50 feet deep. In many cases you can grow two crops because of the rainfall and the weather, and that land will cost an average of about 100 or $500 an acre, probably an average of about $250 an acre. That land is equivalent to the very best land in the United States. That land in the United States would cost somewhere between 2,000 and $3,000 per acre. So we are dealing in multiples of ten here.

   Farm labor in Brazil averages somewhere around 50 cents an hour. The United States, it would be 8, 9, 10, $11 an hour. So again our costs are much higher.

   The other thing that is different about Brazil and the United States is that there are very, very few environmental regulations. In the United States the agriculture people have to comply with clean air, clean water standards, use the right kinds of pesticides and fertilizers and so on, so it is a more expensive proposition. So what we are saying is if we do not have a farm program, we are really at the mercy of the European Union and other countries who subsidize agriculture. And we are also at the mercy of those developing countries who have extremely low production costs.

   We think that for $45 per acre in the United States, we receive a tremendous benefit at a very reasonable price when looked at the worldwide situation. So I think that this here is something that we might think about a little bit.

   So you might say, well, given all of these facts and given the fact that we have a drought and maybe people will concede the fact that the farm bill is not quite as bad as it has been portrayed. Maybe the President did not sell out. Maybe the President did a pretty good thing by signing the farm bill. If all this is true, then what do we do? What do we do to resolve the situation with the drought? What can be done with those farmers who are hanging on? There is no question in talking with those people who are bankers and agriculture lenders that we will lose more farmers and ranchers this year than we ever have because of the drought situation.

   So what is the possible solution to this? And I think that what we would like to do here is talk a little bit about a proposal that the gentleman from South Dakota (Mr. Thune), the gentleman from Kansas (Mr. Moran) and myself have introduced that we think makes some sense. We will take a look at it at this time.

   Mr. Speaker, what we are going to do now is just focus in on 2002. As I mentioned earlier, what was budgeted, the predicted cost of the farm bill for this year, the new farm bill, was going to be roughly $19 billion. In actual fact, as I mentioned earlier, what we are going to spend, based on August prices, is probably going to be about $14 billion, maybe a little bit less, that we will spend this year, which leaves a shortfall of roughly $5 billion.

   You say why did that happen? How could that be? How could you be off by $5 billion? What has happened, as mentioned earlier, the estimated corn production for this year was going to be just slightly under 10 billion bushels of corn. What it looks like now that the growing season is almost done is that we are going to have roughly 8.9 billion bushels of corn primarily because of the drought in those States that we saw on the map earlier. So our production for corn, for soybeans, for sorghum, for rye, for barley, and for wheat is going to be down about 10 percent across the country. And as a result, we will not need farm supports because prices are higher. We have less product, so when you have less product, the demand is greater, and when the demand is greater, the prices are higher.

   So instead of $1.70, $1.80 for corn, we will see something like $2.50, $2.60 per bushel. The same thing for wheat, soybeans and other products.

[Time: 20:45]

   So when we have higher prices, the government does not have to provide the price supports. There will be no loan deficiency payments. There will probably be no countercyclical payments this year so there will be a saving of roughly $5 billion this year.

   What the gentleman from Kansas (Mr. Moran) and the gentleman from South Dakota (Mr. Thune) and myself are proposing is that we take this difference of $5 billion and we allocate that in the form of disaster assistance to those very people who have, because of their loss of crops, because of the crop failure that have caused this gap to occur, because if they had not had the crop failure we probably would not have the higher prices, we probably would have had more government payments coming out and so we need to do something for those people who have had the trouble.

   Of course, the other thing we might mention here is that the livestock producers basically receive almost no Federal subsidies. Whatever they receive is very, very minimal in the form of equipment dollars, and so the livestock people who have lost their pasture and feed and herds in many cases are really on the verge of simply going out of existence in many areas. So we think that they need to have some aid here along with the crop producers.

   Anyway, this is our proposal. We say let us take this gap here, let us take

[Page: H6040]

   One of the solutions that many people have advocated is that we simply take the money out of the new farm bill, and my hypothesis here and the reason I am appearing on the floor tonight is to explain to people that this is something that absolutely cannot happen. We have shown earlier that the new farm bill does not appear to be more expensive than what we were doing. It seems to be more accountable. It provides a better safety net, and the other thing to remember is that there is an 80 percent increase in conservation payments. Most environmentalists, most people in cities, most people around the country would say, yeah, we need to protect our environment, and the farm bill does this.

   The other thing that is in the farm bill that we did not want to see attacked is rural economic development. We are losing young people at a tremendous rate in rural America. They are simply leaving and they are not coming back. If we do not do something to diversify the economy, if we do not do something to shore up our rural areas and to build up our small towns and to bring in broadband services where they can have high speed Internet access, we are simply going to have a more and more difficult time and we are going to unravel more and more.

   We think this is a responsible solution. It does not break the budget because we are not talking about spending money over and above what we thought we were going to spend in the first place. The House has a budget. The House has to stay with a budget. The other body does not have a budget; therefore, they can propose whatever they want to and then ask the President to pass it or veto it. In our case, we have to stay within the budget. In this case, we feel that we are staying within the budget, and we think it is the best thing for agriculture. We think it is the best thing for the country because it is not in the national interest to see a bunch of farmers and ranchers go out of business because of the draught.

   Mr. Speaker, I conclude my remarks and we certainly urge consideration for those farmers and ranchers out there who are struggling with drought. We hope some disaster assistance will be forthcoming, and we certainly hope that my colleagues here on the floor of the House will see fit to help them out in the near future.

END