Release No. 0018.96 Tom Amontree (202) 720-4623 Remarks BY SECRETARY DAN GLICKMAN AMERICAN FARM BUREAU FEDERATION 77TH ANNUAL MEETING RENO, NEVADA -- JANUARY 8, 1996 INTRODUCTION Thank you Dean. I've met with Dean several times in my office and my door is always open to you, Dean ... and, of course, to Gary Hall. You've all come here this week to set a direction for the American Farm Bureau Federation for the next year. I hope that working together, that the Administration and Congress can help facilitate that positive direction. Last September when Dean invited me to speak today, he said you'd be interested in hearing about the workings of the new farm program legislation. By the time of the speech, he said, new farm legislation should have been enacted. Yes, Dean, it should have been enacted by now. This should have been settled a long time ago. Never in recent memory have we gone this late with no new farm rules. As a member of Congress for 18 years, I helped write the last 4 Farm Bills, and I certainly never experienced anything like this -- either the timing or the partisanship. In 1990, the farm bill was signed on Nov. 28. In 1985 -- Dec. 23. In 1981 -- Dec. 22. In 1977 -- Sept. 29. What's been going on the last few months in Washington reminds me of the story of the minister who sold a mule to a neighboring farmer. Before handing over the reins, the minister told the farmer that the mule had a gentle soul and should be treated with kindness. Some days later the minister was passing the farmer's field and saw the farmer standing in front of the mule who wouldn't move. The farmer told the minister that the mule wouldn't work. "Let me show you how to get him going," said the minister. He picked up a nearby 2-by-4 and hit the mule. The mule began to pull the plow. "I thought you said to treat him kindly," said the farmer. "Yes," said the minister. "But first you have to get his attention." -more- -2- What's been going on in Washington lately has gotten the public's attention. But now we need action, not theater -- policy, not politics. We've just experienced the longest government shutdown in history. News reports of the shutdown have concentrated on the hardships on federal workers. But there are millions of other Americans affected as well -- and many of them are farmers. Why? Because for the first time in modern memory, no separate farm bill has passed and it's tied up in a massive budget bill. Each day that passes without a farm bill brings us closer to a crisis situation. UNPREDICTABILITY OF FARMING As you all know far better than I, farming is an unpredictable business. Sometimes it's too hot, sometimes too cold, sometimes too wet, sometimes too dry. We're meeting today in Nevada the driest state in the nation. And now we've added another uncertainty to farming: government support. It doesn't make much sense. It's Mother Nature, not Uncle Sam, who controls when crops should be planted. What happens in Washington doesn't determine what happens in the field of the farmer. On March 9 when the Senate Ag Committee held its first hearing on the 1995 farm bill, planters were already rolling through much of the South. On April 25, President Clinton and I held a National Rural Conference in Ames, Iowa, to hear what farmers from around the country thought should be in the farm bill. While we were there, the winter wheat harvest was underway in Texas and Oklahoma and cotton planting was well along in the South. In the nation's midsection, farmers had made their planting decisions and were laying in supplies of seed and fertilizer. In the North, spring wheat planting was beginning. On May 10, we sent our Farm Bill guidelines -- what we call the Blue Book -- to Congress. The next day, I testified before the House Ag Committee. No matter what we said or did, the winter wheat harvest had advanced to Kansas and Nebraska. Major planting of corn, beans, and grains was underway in the nation's midsection. Beans were being planted in the North. And in the South, most crops were up. On Sept. 20, when the House Agriculture Committee was wrestling with farm legislation and nothing could get out of committee, winter wheat was going in the ground in the South and the fall corn and soybean harvest were underway in the lower Midwest. We held a series of farm bill forums from Oct. 31-Nov. 1 to give the public its only chance to weigh in on the issues emerging from Congressional proposals. While we were listening, Southern farmers had finished harvesting their major crops and were planting winter wheat. Whether or not we held hearings, the corn and bean harvests were in full swing in Kansas through the Dakotas. -more- -3- Over the next few months, you have to make planting decisions. You will be buying seed and fertilizer. You need to know what programs will be in place to know what return to expect from your crops. But that's not all. Bankers need to know what programs will be in place before they will lend producers money. Seed companies need to know before they will sell on credit. Chris Byerhelm, agriculture credit chief for the state of Iowa, told me about one farmer who runs a 600-acre corn and soybean operation in central Iowa who's already beginning to feel the strain. He told Chris that he's trying to make decisions about planting and about the kinds of supplies to buy for the year. But he's finding it impossible without knowing what programs will be available. He's also worried that he'll miss the discounts on supplies -- like chemicals, seed, and fertilizer -- that co-ops and suppliers offer for buying early. CONGRESS AND THE FARM BILL My desire is to work things out. The President did not pick me to pursue a specific ideological agenda when I cam to agriculture but to do our best for the future. The first thing the President asked last week at our Cabinet meeting was when are we going to move on a farm bill. The Congressional reconciliation bill contains hundreds of items -- from Medicare to Medicaid to tax changes. It also contains the entire 1995 Farm Bill, largely because that bill did not pass the agriculture committees -- in either the House or the Senate -- in the normal way. I want to make this point again -- Congress put a massive farm bill inside an even more massive budget bill, and the farm bill was never separately debated or amended on the floor of either body. There was no full debate on farm programs. The reconciliation bill provides a major shift in farm policy by providing "transition payments" to farmers and some of its authors say it will end the major farm price support programs after 7 years. The legislation locks in farm program spending for producers in a way that is guaranteed to become a problem: No matter what the need in agriculture, no matter what other demands are on the Treasury, recipients are still guaranteed a federal payment. That is tough to defend at a time when we are cutting school lunches, student loans and NASA. We support supplementing farm income through a countercyclical program of income support payments. We will help when times are tough. But we will not turn a shortfall into a windfall. We do understand that some farmers have not participated in higher farm prices because of low yield and little production; that is why we provided for a 3-year deferral of repayment of advanced deficiency payments made to farmers, interest waivers and is also why we need to provide an adequate and realistic crop insurance program for producers. We want all farmers to do well. But we don't think payments should go to farmers who don't need them. -more- -4- We don't know what the future holds. Prices are high now and trade is booming, but conditions can change fast. We've seen it before, and we'll see it again. We shouldn't have a farm bill that pulls the crucial safety net out from under farmers, especially when it's inevitable that farm prices will ultimately fall. When times are tough, when prices are low when farmers have to bear the most risk under our plan, government will continue to shoulder part of that risk. WORKING WITH CONGRESS The President named 9 priorities that must be addressed before he will sign a budget agreement. Agriculture policy is one of those priorities. The President and I are committed to reaching a budget agreement that also represents good agriculture policy. I will not be able to recommend an agreement unless it fulfills 3 basic principles: 1. It must preserve a responsible safety net for farmers. 2. It must support a strong, competitive agricultural sector, one that promotes exports, and a vibrant rural economy. 3. It must enhance economic opportunity for farmers and other residents of rural America. There must also be a fourth objective: The agreement must be reached quickly. Mother Nature's timetable means more to farmers than government shutdowns, budget negotiations, and continuing resolutions. Winter wheat farmers have already put their crop in the ground. Over the next several weeks, rice, feed grains, and spring wheat farmers will do the same. They need to know -- and their bankers need to know -- what the programs will be for this year. I have already announced that I would not require an acreage reduction requirement for wheat and feed grains. I expect Congress to affirm those announcements when it enacts new farm legislation. Until it does, I have to carry out the law as it is. Here is my plan: I will announce a rice program for 1996 crops on or about February 15. I'm told that is the date by which rice growers need to know the program. The Commodity Credit Corporation Charter Act gives me broad discretionary authority to carry out a rice program, and I intend to do so. The 1949 Agricultural Adjustment Act -- the permanent law that we operate under in the absence of a farm bill -- requires me to announce national and individual allotments and price supports for the 1996 wheat crop. I have instructed Farm Service Agency officials to prepare those materials so I can announce those provisions by the middle of March. I will make a similar announcement for feed grains at the same time. -more- -5- The '49 Act requires that farm allotments be based on individual farm growing histories from the 1950s. If you are now growing wheat or feed grains and your farm did not produce any in the '50s or if you are growing more, you may be directly affected by this decision. Our initial reviews indicate that allotments based on permanent law will reduce wheat acreage by about one-fifth from the number of acres harvested last year. The '49 Act also requires using parity to determine the price support rate. Our initial reviews of the formula, based on current market conditions, suggest that the price support for wheat could be about $7.82 per bushel. The price support for corn could be in the range of $5.50 to $5.75 per bushel. I would expect to announce final price support rates by the middle of April for wheat, barley, and oats -- the same time I will have to announce whether marketing allotments will be required for the 1997 wheat crop. By the middle of July, I would announce the final support rates for corn and grain sorghum. Other programs -- upland cotton, oilseeds, dairy, sugar, peanuts, and tobacco -- can be carried out essentially unchanged from the programs in 1995 under statutory authority available to me. I intend to proceed accordingly -- I have already announced loan rates for oilseeds for 1996 and just released the final ARP for upland cotton. I am directing officials in the Department to begin preparations for meeting the schedule I just laid out. The '49 Act is the law of the land, and I am bound to carry it.I want to emphasize that I do not prefer this course of action and the 1949 Act is inconsistent and ill suited for the agriculture of the modern era. But we all should be aware of the consequences of Congress' failure to act in a responsible manner. The President is right: Agriculture -- sound agriculture policy -- should be part of the budget agreement. But farmers cannot wait much longer to know what the programs will be. Unless Congress approves acceptable agriculture policy by the February 15 deadline, then I will proceed. ELEMENTS OF A GOOD DEAL Now, let me return to the 3 principles the budget agreement must, and I hope will, include. First, it must preserve a safety net for farmers. The Congressional farm proposal shreds the safety net which has been at the heart of farm policy for 50 years: It makes payments to farmers with no regard to need. If prices are low, farmers get a payment. If prices are high, like today and like they will probably be for the next few years, farmers get the same payment. The final agreement must include a permanent farm program that kicks in when the authority in the budget agreement expires. That is the first ingredient of the safety net. The Congressional bill caps the level of marketing loans for wheat and feed grains. That level should be enhanced to strengthen the safety net for farmers. -more- -6- The Congressional farm bill also undoes the crop insurance reforms that Congress enacted, just one year ago, in a bipartisan fashion with widespread support. I will be the first to admit that we have had some tough times getting the program implemented. But junking the reforms without any real experience with them is no safety net. Instead, we have proposed reforms that would eliminate the linkage requirement for farmers with minimal loss exposure, cutting down on the paperwork burden many of you faced last year. This would strengthen the safety net. So there are 5 elements to preserving the safety-net: prudent spending reductions, continuation of permanent farm legislation, enhanced marketing loan rates, payment structure responsive to market conditions and need, and a strong crop insurance program. The second principle of an acceptable agreement is that it must enable us to maintain a strong, competitive agricultural sector and a vibrant rural economy. The Congressional farm proposal makes the future look pretty bleak. Instead of 3 strikes and you're out, it's 7 years and you're out. Worse, it does nothing to prepare farmers, agriculture, and rural America for the new needs of the new century. To meet the second principle, the budget agreement must direct resources to those needs that will make agriculture strong and ensure a vibrant rural economy. The President and I have proposed increased investments for agrciulture research, rural development (water and sewer grants and loans), and conservation. As commodity programs decline, these initiatives will become increasingly important -- as long as we have made sufficient resources available. This proposal -- a Fund for Rural America -- is essential to the final agreement. Additionally, the budget agreement must preserve a sound Conservation Reserve Authority by providing authority to enroll new -- environmentally fragile -- acreage into the CRP. The Congressional proposal also must not restrict the authority to obtain permanent easements where appropriate. The third principle of an acceptable agreement is: It must enhance economic opportunity for farmers and other residents of rural America. This principle relies on on the first 2 -- a sound safety net, and a Fund for Rural America to meet emerging priorities -- plus the reform of policy to permit farmers to make their own decisions with little or no government interference. The President proposed in his farm bill granting farmers more planting flexibility. Most follow-on farm bill proposals picked up this theme, a theme which must be incorporated into the final agreement. -more- -7- The President also proposed implementing pilot programs to develop new methods of providing income protection to farmers.They might include revenue insurance, IRA-like accounts for farmers, or a fund similar to the Canadian grain stabilization system. That's a key reason to establish the Fund for Rural America: To provide the start-up capital necessary to get these products up and running. IMPORTANCE OF EXPORTS Whatever decision is finally made, agriculture tomorrow will be different from agriculture today. In the 21st century, commodity payments and support prices will be far less important than ensuring that American agriculture remains competitive globally. There is no question that trade and exports are the future of American agriculture. The increasing importance of trade is particularly true for agriculture. U.S. agricultural exports for FY96 are expected to reach a record $58 billion. I want to commend the Farm Bureau for its leadership role in expanding exports. Trade agreements are not always popular, and it takes thoughtful policy development to understand and recognize the importance of trade to the agricultural economy. All the recent agreements were big steps but they should not be the last steps toward fairer and freer trade.Traditional trade barriers cannot be replaced with regulatory barriers, for example, in the form of sanitary or phytosanitary restrictions. Bad science cannot be used as a non-tariff barrier. As a matter of fact, I'm going talking to EU Farm Commissioner Franz Fischler tomorrow on their ban on hormone-treated beef. We will use the tools available to us to ensure that our exports are treated fairly in foreign markets, and that foreign products are exported fairly to us. We also have to be a reliable supplier in the global market or importing countries will look elsewhere. I want to assure you that we have no intention of restricting exports in any way. We have no intention of using export embargoes. I fought embargoes for all the years I was in Congress, and I intend to continue to fight against them. That is a position that the President of the United States agrees with wholeheartedly. We can't prevent the European Union from taxing its grain exports, even if we strongly disagree with the practice of export taxes, but we can reassure our foreign customers that we will not take similar steps. CONCLUSION Farm bill and budget decisions that will -- I hope -- be made soon will affect all Americans because agriculture affects all Americans. -more- -8- There has been a lot of partisan bickering over farm programs in recent months. This is new. Historically, agriculture policy has been non-partisan. I'd like to see us get back to making decisions based on what's the best policy, not the best politics. We don't have a Democratic or Republican economy. We have an American economy, and an American farm economy. We need to get back to the fundamentals: how to spend money effectively, how to protect and support farm income and how to keep up demand for U.S. commodities. Of course, agriculture has a budget component. The Administration recognized that when it targeted a certain amount of savings from agriculture. And the President is committed to a responsible balanced budget. But the best interests of American agriculture -- not the budget -- should drive the decision-making process. If the next farm bill is treated like an accounting exercise, I fear we will make mistakes that could hurt us in world markets and cripple producers who need our help. I hope and I expect, as Administrations and Congresses have always done, that we can still come to a bipartisan, broad consensus on a Farm Bill that will best serve American agriculture and, therefore, the American people. #