Tom Harkin

Mr. HARKIN

Mr. HARKIN. Mr. President, I don't know who controls any time on the opposite side. We have examined the amendment on this side and, quite frankly, I think the Senator from Minnesota has made constructive changes to the EQIP program, which I think will inure to the benefit of our livestock producers all over America. On this side, we are prepared to accept the amendment.

Mr. HARKIN. Mr. President, how much time remains on the Wellstone amendment?

Mr. HARKIN. Mr. President, we have examined both amendments on this side. They are valuable additions to the farm bill. I think they both have tremendous merit to them. We are pleased to accept them on this side. Amendment No. 2847

Mr. HARKIN. Mr. President, how much time do I have remaining?

Mr. HARKIN. Mr. President, frankly, I think it is quite appropriate. We plan to propose a pilot program in the manager's amendment. This just expands it. I am trying to do something that reaches across the aisle in a bipartisan atmosphere, something that friends on the other side of the aisle and the President have called for in doing something about these farm savings accounts. I don't really know whether they will work or not, but I am willing to let them try to put some money in the pilot program. On the other hand, on nutrition programs, there is $49 million a year. Every dollar helps. When you are spending $20 billion a year and say we are going to put in another $49 million, you could look at it and say that doesn't do much. The Senator from Kentucky says we are not taking much out of farmers. You are not taking much out of farmers but you are not doing much to help poor people, either. If you are going to do that--if you are going to nick the farmers a little bit--rather than holding out false hopes to poor people that somehow you are really going to boost nutrition programs, which you really aren't with this amendment, then at least try to do something that might be meaningful to help farm income in the future. Quite frankly, $50 million used in the farm savings accounts could be the underpinnings to help farm income in the future. That could be meaningful. But $49 million, or $50 million, on $20 billion for food stamps is, as I said, holding out false hopes to poor people that somehow you have done something. I suggest to my friend from Kentucky that perhaps he might want to tell the President not to send the budget down here that has $4.2 billion in increases in nutrition programs when we are already at $8.4 billion. I had hoped the President would have sent down a budget that said, no, we need to put more money in nutrition, and we need $8 billion or $10 billion, as the ranking member was trying to do in committee with $10 billion more for nutrition. On the other hand, that amount of money going into farm savings accounts could be quite significant to a number of farmers. I yield the floor. I reserve the remainder of my time.

Mr. HARKIN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. HARKIN. It has been modified.

Mr. HARKIN. Mr. President, I move to reconsider the vote.

Mr. HARKIN. Parliamentary inquiry: What now is before the Senate?

Mr. HARKIN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. HARKIN. I commend the Senator's work on behalf of Missouri family farmers and thank her for her consideration of this amendment. This amendment will indeed apply to farmers who were under appeal status when the deadline passed but later were found to be in compliance and eligible for payments and assistance under Public Law 107-25. The amendment provides that they will receive payments for which they were eligible and have not received. I am pleased that this amendment will help Missouri farmers facing difficult situations. Nutrition

Mr. HARKIN. I want to thank the Senators from Washington and California for their strong advocacy for the Market Access Program. I believe this is an indispensable program, particularly for specialty crop producers around the country. To answer the question raised by the Senators from Washington and California, I agree we need to fund MAP at $200 million. The conference committee will have to address many difficult issues, however I believe it is a reasonable goal to try to fund MAP at $200 million as soon as possible, recognizing that it may take some time for USDA to ramp up the program effectively.

Mr. HARKIN

Mr. HARKIN. Madam President, I wish to make a very short statement today. I would refer my colleagues to a lengthier statement I made when----

Mr. HARKIN

Mr. HARKIN. The Senator is correct.

Mr. HARKIN

Mr. HARKIN. Mr. President, President Bush was in Denver this morning. He has probably left by now, I suppose, and is on his way to the Olympics in Salt Lake City. I was very interested in his stop in Denver because he gave an address to the National Cattlemen's Beef Association. He talked about some of his ideas for the new farm bill. At the outset, I want to note I had a chance to speak personally with the President briefly when he visited Moline, IL, the home of John Deere, about 3 weeks ago. I asked if we could get together and meet on this farm bill, and he said that we could. I am still looking forward to that meeting. The message that I thought came through to the President very clearly in Moline, IL, was that the farm bill is the economic recovery bill for rural America; that farmers need some certainty, and that our agricultural lenders, agricultural businesses and rural communities need some certainty about what the farm program will be this year. Without some greater assurance, farmers cannot buy the supplies, equipment and other inputs they need and that affects the rural economy. So I was hopeful and remain hopeful the President will help us try to get this farm bill through the Senate, but we are still stuck on it. I remain hopeful we will be able to finish this farm bill next week, but then again that is not certain. I paid some attention to the speech the President gave in Denver, and I was interested in what he mentioned. First of all, he said he was committed to the $73.5 billion over 10 years in new spending for the farm bill, which was in our budget resolution for this year. That is good, but it is important to note his budget also calls for dramatic reductions in commodity loan rates. A good share of that $73.5 billion would be required just to make up for the large loan rate reductions. So it is critical to look carefully below the surface of the budget. Now, the President then went on to talk about how new farm bill funding must be evenly spent over 10 years. He says he doesn't want to ``front-load'' it, which he said ``overpromises and underperforms.'' I don't quite understand that expression, but it is clear he wants to spend the farm bill funding evenly over 10 years. There was one glaring omission in the President's remarks. He did not mention that his own Department of Agriculture, a month ago, estimated that net farm income this year would be 20 percent lower than it was last year unless we provide additional assistance. The President glossed over that fact about the dire state of the farm economy. The President evidently is pointing at the Senate bill which puts somewhat more of the $73.5 billion in the first 5 years than it does in the second 5 years. Actually not a lot more. Half of $73.5 billion would be somewhere around $37 billion. Our bill is about $40 billion in outlays in the first five years. So it is only about $3 billion more than half. We believed it important to put more funding upfront because now is when it is critically needed. The President's own Department of Agriculture said that we would see a 20 percent drop in net farm income this year. When farmers are hurting and going out of business, that is the time to come in and help. I don't know what the farm economic situation will be 8, 9, or 10 years from now. It may be just fine. If that is the case, we should not need to spend much of any money on commodity programs 8, 9, or 10 years from now. But when commodity prices are low and farmers are struggling, as they are, now is the time to reach out and help. That is the main reason why there is more funding in the first 5 years than in the second 5 years. The President did not mention that. He wants to say, whatever we spent this year is what we will spend 9 years from now. What sense does that make? I don't know what will happen 9 years from now. I hope farmers are making good money and don't need Government assistance 9 years from now. There is more money in the first 5 years of our bill because it is needed now to help farmers stay in business and for rural communities that are struggling economically. The President said a good farm bill should include the farm savings account. That is fine. I have nothing against farm savings accounts. When you are losing 20 percent of net farm income, how do you have money to put into a savings account? Then he said it must include conservation. I believe he said every day is Earth Day for people who rely on the land for a living. If that is the case, why did the administration in December support a substitute to the Senate bill that slashed support for conservation? What the President is saying does not track with what the administration is doing in Washington on this farm bill. The President was speaking to the National Cattlemen's Beef Association, the producers of our beef cattle. I am disappointed the President did not mention packer concentration. We debated that this morning. We had debate on it in December also, including the fact that four large packers control 81 percent of all the cattle slaughtered in America. If that is not undue economic concentration, I don't know what is. Yet the President did not talk about that. We have an amendment on this bill to keep packers from feeding livestock so that our independent pork and beef producers can have a better bargaining position and a fighting chance to survive. But the President didn't mention the issue of economic concentration in Denver. I find that curious, at the least. The President also said something about political budget gimmickry and cobbling together loose political coalitions. Is this the President who said we have to work together, that we should all work together in a bipartisan atmosphere? There are competing interests. Agriculture covers a broad spectrum in America. Of course we want to take into account farmers in Vermont, as well as we take care of farmers in Texas, or in Washington, or in Maryland, or in Iowa. It is a broad country. As chairman of the Senate Agriculture Committee, my responsibility is to be cognizant and aware and supportive of agriculture nationwide. Yes, we have put together coalitions. Of course we have. But isn't that what the President wants to do? Work together in a bipartisan atmosphere and try to put together a coalition to get something through? He said we cannot set the loan rates too high. Specifically, what does that mean? He also vowed, when he became President, he would make agriculture the cornerstone of U.S. economic policy. Yet I have not received the specifics from the Administration that would allow us to negotiate to come up with the new farm bill. To make something a cornerstone, you have to lay a foundation down first. I have not seen the specifics of a farm bill from the Administration to lay down a foundation for agriculture. Last year when the Department of Agriculture under Secretary Veneman put out a policy book on American agriculture, I gave it high praise. I found I could support a lot of the objectives in that book, especially including stronger support for conservation. We put it in our bill. Most of it was in the Department of Agriculture book last year. Again, I was very shocked in December when there was a substitute bill offered to ours that drastically cut the conservation we had put in our bill and the administration supported it. So I hope there will be less talk about political gimmickry and more cooperation from this administration when it comes to getting this farm bill finished. I am looking forward to work with the President. I have said that time and time again. We have worked in a bipartisan atmosphere here. I continue to point out, as I always say, the facts give lie to rhetoric. The fact is, our bill came through our committee with strong bipartisan support, every single title except the commodity title, which still had bipartisan support but just not overwhelming bipartisan support. The bill on the Senate floor now commands a bipartisan majority. It is good for agriculture. If we are accused of having gone overboard to represent the dairy farmers in Vermont, the sugar farmers in Louisiana, the cotton farmers in Texas, the rice farmers in Arkansas, the corn and soybean farmers in Iowa, the wheat farmers in Kansas, the pork producers in Iowa and the upper Midwest, the cattle producers all over America, the orchards in Michigan, and the apple growers in Washington State--if we are accused of having gone out of our way to help them survive and be a vital part of rural America, I plead guilty. You bet we have because I believe in American agriculture, and I believe it still should form the foundation for our economic policy in America. Believing that, we have laid down the cornerstone, we have laid down the foundation, on energy and conservation and commodities and rural economic development and trade and, yes, nutrition. On nutrition, for which the President's budget provides some $4 billion less for nutrition than is in our farm bill, that is an important part of the farm bill. I appreciate the President paying a visit to the National Cattlemen's Beef Association. I look forward to working with him in a bipartisan atmosphere, to get through a sound farm bill. I just hope his speech writers and those who are advising him might better inform him what we are doing. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. HARKIN

Mr. HARKIN. Madam President, I move to reconsider the vote and move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 2837 To Amendment No. 2835

Mr. HARKIN. Madam President, I ask unanimous consent reading of the amendment be dispensed with.

Mr. HARKIN. I am pleased the Senator is pointing out what is happening. I specifically thank the Senator for pointing out the ad run in the Sioux Falls Argus Leader Editor, newspaper on Sunday, February 3. This is a paid advertisement, quite a big ad from Smithfield Foods, signed by Joseph Luter III, chairman and chief executive officer of Smithfield Foods. It is quite a lengthy ad. They are going after Senator Johnson for offering this amendment. I guess they are angry that his amendment passed. In line with what the Senator from Minnesota said, this smacks of a powerful firm trying to use its economic power to blackmail. I have not seen in recent times a more blatant example of that than this ad put out by Smithfield Foods and Joseph Luter III. But let me read the last paragraph: If the Johnson Amendment becomes law, Smithfield Foods will neither rebuild the Sioux Falls plant, or build a new plant in South Dakota, nor will we make any further investment in South Dakota, or for that matter in any other state whose public officials are hostile to our ongoing operations and our industry. Signed by Joseph Luter. Now, that is economic blackmail. We have more concentration in the meatpacking industry today than we had 100 years ago when this Congress began to break up the packers; they had too much economic power, too much concentration. We have more today than we did then. This is economic blackmail. They are saying they will not do anything ``in any State whose public officials are hostile to our ongoing operations and our industry.'' Well, they have plants in Iowa, too. But I can tell you that I am not hostile to their industry. We need the meatpacking industry in this country. We would like to have another meatpacking plant in the State of Iowa, in fact. However, what we do not want to see is the vertical integration where the packers own the livestock and they are able to dictate to a farmer what that price will be for the cattle. It used to be in my State a cattleman would get, two, three, or four bids for his livestock. Now, with this kind of economic concentration, what happens is a packer goes out and says, this is what I will pay you. Take it or leave it. If they leave it, the packer says, that is all right, I have enough cattle of my own; I don't need your cattle. I have a captive supply. That is what happens. They drive more and more of our cattlemen out of business. I am upset at some of the entities that are supporting this position, saying the packers should own this livestock. This amendment is very simple. It says that the packers, prior to 14 days, cannot engage in ownership or control. As the Senator said, we will shortly have a second-degree amendment to the Craig amendment which undoes that, to specifically point out what control is and is not so it would not prohibit, for example, forward contracting. If they are hung up on the word ``control,'' we have an amendment that Senator Grassley and I are working together on to make crystal clear what we mean so there will not be any ambiguity. I don't think there is in the present one, but we will make it even clearer. I say to my friend from Minnesota, we ought to get even more votes now because of this kind of economic blackmail.

Mr. HARKIN. Madam President, I ask unanimous consent that the pending amendments be set aside and ask for the regular order with respect to the Conrad amendment No. 2836. This amendment has been agreed to by both sides, and I urge its adoption.

Mr. HARKIN. Will the Senator yield?

Mr. HARKIN. Madam President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. HARKIN. Madam President, I will speak a little bit now on this amendment and what it pertains to, but I am offering this on behalf of Senator Grassley, my colleague from Iowa. This is an amendment to the Craig amendment. Senator Grassley, unavoidably, could not be here today. He has to be back in the State of Iowa. But, obviously, we will not be voting on this until next week anyway. But we wanted to lay this down today. I am going to take the time now just to talk a little bit about this amendment and what it does. And then, of course, my colleague, Senator Grassley, will further elaborate on this when he returns after the weekend. As my colleague from Idaho, Senator Craig, mentioned yesterday, there has been a great amount of hype surrounding Senator Johnson's amendment that bans packer ownership. I cosponsored that amendment. The chief cosponsor, of course, was Senator Grassley from Iowa. Now, Senator Craig wants to replace the Johnson amendment which was adopted in the Senate, with a study because Senator Craig says he has some concerns about how the Johnson amendment will work. The basic concern--as I understand it, and as I listened to the speech last night and have read the Record--is over the word, ``control''; that somehow there is a confusion about ``control'' and whether ``control'' would prohibit any kind of contracting relationships that a packer might have with a producer. Certainly, I believed when the Johnson-Grassley amendment was adopted that it was quite clear in the legislative language, and in the legislative history, that the amendment did not in any way preclude various types of contracting arrangements, such as forward contracting, for example. But those who are representing the huge packing industry have come in and kind of muddied the water. They have clouded it up and said: Oh, no, this may take away a farmer's right to contract. Of course, I have heard from some of my farmers in Iowa, who, first, do not want packer ownership of livestock because they know how badly that affects them, but, second, they do not want to have interference with contractual relationships they might want to make with packers. So to take care of any lingering concerns about this issue of ``control,'' Senator Grassley is offering a second-degree amendment to Senator Craig's amendment. In essence, Senator Grassley's amendment, which I have asked to be a cosponsor of, will make it clear that while packers will not be able to own livestock, farmers will still be able to use contracts if they want to. As I said, there has been a lot of sort of hubbub going on around the Johnson amendment. Earlier this morning, I engaged in a colloquy with my friend from Minnesota, Senator Wellstone. And there were these egregious ads taken out in the Sioux Falls Argus Herald by one large packer, Smithfield Foods, Incorporated. The person who signed that was Mr. Joseph W. Luter, III, chairman and chief executive officer of Smithfield Foods, Inc. We talked about this ad and how egregious, how bad it is. It really is economic and political blackmail in the way this ad was written and what they are threatening to do. So again, to clear this up, Senator Grassley and I have offered this amendment to help address this type of economic strongarming. What the bill said, and what the legislative history made clear, is that packers could no longer own livestock, but the farmers could still contract and enter into these marketing agreements. Well now, how did the industry, the packing industry, create all this fuss? They did everything in their power to confuse and scare farmers, by making the conclusory statement that the Johnson legislation would ban contracting. In one paper, which Senator Craig referenced last night, eight economists made the same false assumption that the prohibition of packer ``control'' of livestock would affect contracting. Why the economists assume this, I do not know. The economic paper provided no legal analysis. I am told that none of the eight economists is a lawyer or has had any training in the law. The economic paper provided no legal analysis. In fact, to my knowledge, the opponents of this ban, the big packers, have never released any type of legal analysis to the public. They have just said this as a scare tactic. I guess the reason they have not released any legal analysis is because it would not survive legal or public scrutiny. The economists relied on an incorrect legal assumption. So they relied on an incorrect legal assumption, and they provided a detailed analysis based on that incorrect legal assumption. And, of course, the packing industry and the press ran with it. Thankfully, three lawyers who have worked in agriculture for years and are some of the best known in the field pointed out the fallacy of the economists' assumption. Roger McEowen of Kansas State University, Neil Harl of Iowa State University--whom I know personally is both a lawyer and an economist--and Peter Carstensen of the University of Wisconsin Law School, the three of them thoroughly explained that the word, ``control,'' has a very predictable meaning in the law and that it does not affect contracting. Madam President, I will not read it, but I ask unanimous consent to have printed in the Record the analysis and statement by these three individuals regarding the legal standpoint issue of ``control.''

Mr. HARKIN. Madam President, what is the regular order right now in terms of amendments?

Mr. HARKIN. Madam President, I now ask for the regular order with respect to the Craig amendment No. 2835, and call up Senator Grassley's second-degree amendment No. 2837, which is at the desk.

Mr. HARKIN. So even with the assurance from these three legal experts, the opponents continue to raise doubts about the Johnson amendment's effect on contracting, even to the extent that some of the original supporters of the ban now want to set it aside because they, too, are concerned about this control issue. We cannot take this step backward. Recently, Senator Grassley and I, and others, have been working with some of these legal experts, as well as the American Farm Bureau, to develop an amendment that takes away any need to delay further any ban on packer ownership. This amendment makes it even clearer that while packers cannot own livestock, farmers still have the ability to forward contract and enter marketing agreements. Let me describe how this amendment works. Essentially, this amendment says that a packer can forward a contract or enter into any type of marketing agreement as long as the producer continues to materially participate in the management of the operation with respect to the production of the livestock. The key phrase here is, ``materially participate.'' Why do we choose those words? Because there is a well-established definition to the phrase. Every farmer knows the phrase. Every attorney who works with the farmers knows well the importance of the term. That is because a farmer who materially participates in the farming operation must pay self-employment taxes. Those who do not materially participate do not have to pay self-employment taxes. The phrase has appeared in the IRS Code, section 1402(a) since 1956. To say that there is overly abundant case law and administrative comment and law review articles about the term would be an understatement. The legal community, the tax community, and the farm community know the difference because it is simply the difference between having to pay self-employment taxes or not paying them. What does this mean for forward contracts and marketing agreements? This amendment does not affect them. I know that farmers in Iowa who sell hogs under marketing agreements or who sell cattle under forward contracts materially participate because they pay self-employment taxes. Because the farmers materially participate in the management of their livestock production, this amendment will not affect their contracts. This amendment takes care of any concern that people had about the original law being unclear. It definitely takes care of anyone's concern about the law's effect on contracting. This amendment also maintains the same exemption from Senator Johnson's original amendment; that is, it exempts cooperatives as well as small packers who slaughter less than 2 percent of the national slaughter. Therefore, many of the innovative startup projects operating and being formed to get producers greater bargaining power in the market will not be affected by this amendment. I have to say something about Senator Craig's amendment in which he wants further study. Around here we know that an amendment to do a further study is killing the amendment-- especially this one. Senator Craig says we need more information. We have been there. The USDA has released a number of studies and papers on the issue of packer ownership and captive supply over the years, and the only thing that is clear is that the issue begs for policy clarification from Congress. Just in the past few years, the USDA released a major study on the procurement practices in the Texas panhandle as well as a recently released paper on the captive supply of cattle. This paper, which was released on January 18 of this year, included a 15-page appendix that lists the numerous studies already conducted. Senator Craig wants more studies. What do these studies find? They find a strong correlation between increased captive supplies and lower prices. The correlation is there. But the studies usually find that it is too hard to tell for sure whether one causes the other. It seems that the USDA is never going to be able to tell for sure. Someone can always create doubt. It is precisely in these types of situations that Congress should step in and clarify that certain practices such as packer ownership are illegal, to clarify it once and for all. It really boils down to this: If you believe that the top four packers of cattle in this country who control 81 percent of the market should be able to own livestock in a captive situation--if you believe that--you want to vote for Craig. You don't want to vote for the Grassley amendment. But if you believe that those independent cattle producers in Missouri, Iowa, South Dakota, Nebraska, Texas, and Kansas--all over the Midwest and the West--if you believe those independent producers ought to have some bargaining power and be able to bargain and negotiate with those top four packers on prices and have some independence and be able to own their livestock or to contract it, then you will want to vote for the Grassley amendment. That is what it is all about. You have huge packers who want to own livestock, who now own livestock. And here is the way it works. The packer owns the livestock. The farmer comes in. When cattle are ready to sell, you can't keep them around much longer; you have to sell them. So you go to the packer, and the packer says: Here is how much money I will give you for them. The livestock producer says: That is not enough. The packer says: Take it or leave it, because I have my own cattle which I can feed through the packinghouse, and I know you can't keep those cattle for another 14 days on feed. There you go. They squeeze them. It is called economic concentration, and they squeeze those independent producers. They are going out of business right and left. In my part of the country, we like to have a good livestock industry. You have balance. Sometimes when grain prices are low, you get high livestock prices. If livestock prices are low, you get higher grain prices. You have a good, even income for farmers who may have both livestock on feed, whether it is cattle or hogs, and grain production. This takes away from those independent farmers a valuable source of income and livelihood. Packer ownership does not help farmers. The packers get an increased ability to manipulate the markets. When packers lock up the chain space, as they say at the packing plant, the farmer does not have access to the market. We don't need a study. We have had enough studies. We need good, clear legislation. The Grassley amendment that prohibits the ownership of livestock by packers clears this up once and for all. Studies we don't need. We don't have to wait for studies. We have had plenty of them. Our farmers have been calling for action for years. Literally dozens of farm, commodity, rural community, and religious groups seek a ban on packer ownership. The two largest general farm organizations, the American Farm Bureau and the National Farmers Union, have explicit policy against packer ownership. They don't call for more delay. They don't call for more wringing of hands, for more studies that never seem to come to fruition. They want us to respond to the real problems that real farmers have out in the countryside today. Our farmers deserve more than just another study that is not going to show anything. They want real reform in the livestock markets. I think it is time to give them what they need and what our country needs. If we really believe in the market system, and we believe in many players and transparency and openness, how can you vote to let four of the top packers of livestock who control 81 percent of the market control all the inputs? That is not a free market. What our livestock producers are calling for is a free market. That is what we are calling for. I compliment my colleague from Iowa, Senator Grassley, for his amendment and for working with us--and the staffs working together with others--on a bipartisan basis to clear this up once and for all. When we get back next week, we will speak again about this. Over the weekend, there should not be any doubt in anyone's mind that the Johnson amendment would prohibit forward contracting. It doesn't. But in case there is any lingering doubt, the Grassley amendment clears it up and makes it explicitly clear that this amendment will not prohibit contracting relationships between farmers and packers. I yield the floor.