Tom Harkin

Mr. HARKIN

Mr. HARKIN. I sure will yield for a question.

Mr. HARKIN. No, I don't need more time. I am going to finish this up.

Mr. HARKIN. I don't need any more time.

Mr. HARKIN. Mr. President, I will yield for a question without losing my right to the floor.

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

Mr. HARKIN. Mr. President, I yield myself whatever time I consume right now. This is not a new program, it is ongoing. We are not opening any debates. We had an amendment last fall for $34 million. This adds $100 million more on it. We had to for the scoring. They get $150 million and they can deduct it from their taxes. The reason it is on ag appropriations is that it should be here because it has to do with FDA; it is funding and it is money. That is what an appropriations bill is all about. We are not legislating on an appropriations bill. Again, 70 Senators last September voted for this amendment. Seventy Senators on both sides of the aisle voted for $34 million. This bumps it up to $100 million to fully fund the youth ID check nationwide. Mr. President, I yield the floor. Mr. NICKLES addressed the Chair.

Mr. HARKIN

Mr. HARKIN. Mr. President, I wanted to correct myself. I did look at the order that was entered. The Senator from Mississippi is right. The order was entered that there would be a motion to table. I did not think that was the case. I stand corrected. Mr. President, I was still waiting for one Senator on our side to come and speak. So, again, I suggest the absence of a quorum.

Mr. HARKIN. I yield myself another 10 minutes.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. HARKIN. I am sorry if I am impeding the business of the Senate in raising this question.

Mr. HARKIN. I thought perhaps the chairman might be willing to place this matter for an up or down vote, rather than vote on a motion to table.

Mr. HARKIN. I want to inquire of the chairman--obviously it is well within his right to move to table--why can't we have an up-or-down vote?

Mr. HARKIN. I inquire of the chairman, I understand we have one other Senator on this side who would like to come down and speak.

Mr. HARKIN. I yield myself 2 additional minutes. In addition, my colleague from Indiana worries about the potential implications for stocks from this amendment. World grain reserves right now, as a percentage of consumption, are at historically low levels. I believe the American people would be appalled to learn that our Government holds virtually no food in reserve to help us out if we ever have a widespread crop failure. The chairman suggests that if the Government holds this grain, it stays over the market and depresses prices. Not if you have a government reserve withheld from the market--absolutely not true. But this concept of having a modest reserve is not a new idea. Someone said it began with the Roosevelt administration. This is a Roosevelt New Deal idea, to have a grain reserve, and, as such, we had to do away with it because it was a New Deal idea and we don't need all that stuff around anymore. The concept of a grain reserve is as old as the Book of Genesis. Surely my colleagues remember the story of Joseph interpreting the dream of the pharaoh, that there would be 7 good years followed by 7 lean years and that food should be stored during the 7 good years to feed the people when the bad years came. It was true at the time of Genesis and it is true today that we need some food set aside in this country and around the world to meet exigencies. For the life of me, I can't understand why people want to ignore history. We ignore it at our own peril. Ignore it, and we will lose more and more farmers, and we will see a day come when there will be panic because we will have those lean years and we won't have any food to help feed our hungry people. I yield the floor.

Mr. HARKIN. I listened, of course with great interest and intent, to the comments by the distinguished chairman of the Agriculture Committee, my good friend from Indiana. I am privileged to serve as his ranking member on the Agriculture Committee. I think, first of all I will just respond to that and also to the statement made by the chairman of the Agriculture Appropriations Subcommittee about, ``My gosh, we passed the farm bill in 1996. Here we are, do we want to rewrite it?''--and all that kind of stuff--``We should not open it again right now. It's the third year we are in it.'' The 1996 farm bill is not the Ten Commandments. It was not written in stone for all time. We have a crisis impending on us in agriculture. The bottom is falling out. Prices are going down every day. Are we so stuck in our ways here, are we so wedded to some ideology imprinted in the 1996 farm bill, that we cannot respond? ``Oh, I am sorry. We see you are losing your farms. We see the prices going down. But, I am sorry, we passed a bill here 3 years ago and we cannot touch it.'' Again, we are not really opening up the farm bill. We are simply making one minor change. Loan rates were capped in the 1996 farm bill-- capped, frozen; they are still there. We are not introducing something new into agricultural legislation. It is simply that a decision was made to cap them. That is OK. That was OK for the last couple of years, because grain prices have been relatively high. But now when the bottom is falling out of the market for a variety of reasons, now is the time when farmers need a little bit of assistance. What kind of assistance? They need flexibility. We hear a lot about that word, ``flexibility.'' In the 1996 farm bill, it did give farmers flexibility in planting decisions. That was a good part of the 1996 farm bill, a concept that was supported by everyone. But how about flexibility for the farmer to be able to decide how to market their crops? That is what we are trying to do by raising the caps on the loan rates--to give the farmer the ability to harvest the crop, get a loan on that crop to pay the bills, and then be able to market that crop when the farmer feels it is most advantageous over the next 15 months. That is called flexibility, Mr. President, flexibility--to give the farmer some flexibility in marketing. What I am hearing from the other side now is, ``No, we don't want to give that farmer flexibility. We want to give the farmer flexibility in what to plant. But when it comes time to market, he is at the whims of the marketplace, of weather, of other countries and what they do, over which we have no control.'' That farmer is at the whims of the disastrous Asian economy. We cannot even give that farmer a little bit of support to give him the flexibility to market over 15 months? What nonsense. What utter, absolute nonsense. Thousands of farm families are facing severe economic hardships. They are in danger of losing their livelihood, their life savings. Just yesterday, the Senate went on record with a sense-of-the-Senate resolution saying there is a great economic crisis in agriculture and calling for immediate action by Congress: 99 to nothing. Nice words on paper. But now, here is the first vote to implement that sense-of-the- Senate resolution that we passed yesterday. We are for the first time trying to raise the caps on the loan rates to give the farmer the flexibility to market, and now we can't even give them that much. We can't even do this modest step. What did that sense-of-the-Senate resolution mean? Mr. President, I offered that sense-of-the-Senate resolution along with Senator Daschle. It passed 99 to 0. I am wondering, if we can't even do this modest little step to help our farmers out, maybe we ought to recall that amendment. Maybe we ought to have another vote on it and this time vote it down. Why give all this flowery support that we are going to help agriculture? There is a problem out there and on the first vote, ``I am sorry, the farm bill is written in stone; we can't touch it.'' What we are proposing is a quite modest and reasonable response to try to prevent the farm situation from becoming any worse and to help turn it around. Quite frankly, I am a little embarrassed at the modesty of our proposal, but we thought in order to minimize any opposition, we would keep it limited. We are not proposing any radical changes in farm policy. We are not opening the floodgates of the Treasury. We have been very careful in that respect. I must confess, if we cannot manage to adopt even this modest amendment today, it will speak volumes about the willingness of this body to respond to the dire situation in rural America that we just recognized yesterday in a sense-of-the-Senate resolution. I underscore that the rural economic crisis is not the fault of America's farmers. We have a world situation where large supplies of commodities have combined with weakened demand, with a terribly depressed Southeast Asian economy that has driven commodity prices lower. In the last 2 years, farm level prices for corn, wheat and soybeans have declined 39 percent. Cattle prices are 20 percent below the level earlier this decade. Hog prices for the first half of 1998, are the lowest seen in 20 years. On top of that, numerous regions have experienced bad weather and crop diseases that have devastated our farmers. As of yesterday, a farmer would receive a price of $2.50 a bushel for wheat at a country elevator in Dodge City, KS. At that price, the average Kansas farmer with about 350 acres of wheat in the ground right now will suffer a loss of more than $40,000 over his cost of production. And we are telling that farmer we can't do anything to help him? With the average corn market price announced by USDA on July 10, the typical Iowa corn farmer will be losing more than 35 cents of every bushel of corn he markets, even considering the modest Government payment that he is going to receive under the 1996 farm bill. Mr. President, 32 of 50 States have suffered declines in farm income in 1996 and 1997. Here it is, 32 of 50 States: North Dakota, 98 percent; Iowa, down 16 percent; New York, 44; Pennsylvania, 32 percent; Kentucky, down 29 percent; Tennessee, loss of 28 percent; Missouri, down 72 percent. That is what is happening. That is the loss in farm income, according to Dept. of Commerce figures. As I noted yesterday, Standard & Poor's Index for Wall Street has gone up 36 percent in the last year. Look what has happened in agriculture. And yet we can't do anything? Not even this modest, little increase in loan rates? If the price estimates released July 10 by USDA hold up, lower corn and soybean prices will cause an additional loss of farm income in my State of Iowa alone of over $1 billion this year. That translates into 19,000 jobs in my State affected directly or indirectly by agriculture. On a national basis, this year's crisis will strike a severe blow. USDA estimates suggest that 1998 farm income will fall below $50 billion, 13 percent lower than it was in 1996. With the season average corn and rice projections being lowered 6 percent in July, that number is going to fall even more. The $5.2 billion decline in farm income could translate into a loss of nearly 100,000 jobs in the agricultural sector and ag-related businesses. Mr. President, 1998 total farm debt is estimated to amount to $172 billion, the highest level since 1985. For those of you who don't remember 1985, let me refresh your memory. That was the height of the farm crisis. From 1985 to about 1988, hundreds of thousands of farmers lost their farms in the United States. It devastated rural America. It took us, well, almost the next 10 years to climb out of it. Now that we are getting out of it, farmers are hit once more. We are going to have a huge farm debt again this year. We are going to have another wave of farm foreclosures and farm losses. Families are losing the equity they have built up in their farms. Those who survived the 1980s and thought they had it made because they weathered the worst financial crisis in agriculture since the 1930s are on the edge and they are getting pushed off. Farm families and communities are facing an emergency, and we in the Senate must act, as we have traditionally done when emergencies strike. It is important that all Senators understand what our amendment does. It focuses on the level of the loan that a farmer can take out on farm commodities after harvest using the crop as collateral. This loan allows the farmer to pay the bills, as I said, and retain the crop for up to 15 months so they can market it in a flexible manner. It let's the farmer make the decision of when to sell rather than being forced to sell because the bills are due. You can think about this amendment as the ``flexibility to market'' amendment. The formula has been around for a long time. As I said, there is nothing new about this. It is in the farm bill: 85 percent of the 5- year average, throwing out the high and the low years. That is the basic formula, 85 percent. The distinguished Senator from Indiana went on at great length talking about how we don't want this loan rate set so that it will influence farmers to make their planting decisions, because if the loan rate is too high, then the farmer plants for the loan, not for the market. I have three observations on that. First of all, this amendment only covers the 1999 Fiscal year. We re talking about crops that are already planted, for the most part. So how can a one-year amendment have any substantial influence on farmers' decisions about what to plant next year? I think perhaps people who have been speaking against the amendment don't understand that. It is only for one fiscal year. Even assuming somehow psychologically it did because the farmer might say, ``Well, I got that loan this year and if things remain bad next year, maybe they will do the same thing next year, so, therefore, I will make my planting decisions based upon that possibility'' that is ridiculous in the extreme. Why? Because, first of all, this loan rate is only 85 percent of the last year 5-year average, throwing out the high and low years--85 percent. For corn right now, the farm bill cap is $1.89 a bushel. Our modest amendment would remove that rate, raise it to $2.19 for this crop year. Wheat right now is capped at $2.58 a bushel. Removing the cap would put the rate at about $3.22 a bushel. Both of those are way below the cost of production. If you are a farmer, and you are making planting decisions based upon the loan rate, then what my friend from Indiana is saying is that the farmer is going to plant more corn to get a loan rate that is lower than his cost of production. It reminds me of the old joke, the old saw we always hear around my State about farmers. Someone asked the corn farmer how he expected prices to be? He said, ``Well, I hope to at least break even because I need the money.'' According to the Senator from Indiana, raising the loan rate to $2.19 would somehow encourage a corn farmer to plant corn. Nonsense. That is way below the cost of production and no farmer would ever do that. They are going to plant based upon what they think they can get in the market next year. So those are two things. First of all, our raising the caps only apply to this upcoming fiscal year; secondly, there is no way that this modest raising of loan rates will in any way influence any farmer to plant for the loan. In no way would that do that. And third, I must again remind our Senators and others that in agriculture--I do not know why we never learn the lesson of ag economics--a farmer has a fixed amount of land, he has fixed machinery, he has a lot of fixed input and equity costs. If prices drop, there are those who say, ``Well, see, that will send a message to the farmer. If the prices go down, they will plant less of that crop next year.'' That is not so. Because when you have your fixed base and your fixed amount of land and your machinery, if prices go down, your first impulse is to get more production out of that unit of land. Maybe you will check on fertilizer prices. Maybe you will put on a little more fertilizer. Maybe you will put the rows a little closer together. Maybe you will do some other things. Maybe you will plant a little more on some land you did not want to plant on because you already have the machinery out there. The marginal cost of production for an additional acre of corn, if you are already planting 500 or 1,000 acres of corn, that marginal cost of planting that extra 20 acres or 50 acres is minimal. Yet, if you can raise your production, well then, that will take care of the lower prices. But that feeds on itself. I predicted 2 years ago, when the 1996 farm bill passed, that that is exactly what would happen: We would see increasing production. Hopefully, the price would stay up. But if other countries' economies went to pot--and we saw a couple years ago that it looked like that might happen--well, then, prices would drop. And how would farmers respond? They would plant more and produce more. And that is exactly what has happened--exactly what has happened. We probably have a record production of soybeans this year, near record production of both wheat and corn. But somehow people just think that agriculture is just like making widgets. And it is not. It is a lot different. This amendment is very modest--very modest. We are not proposing to change the 1996 farm bill in any way. As I said, this provision is in the 1996 farm bill. It is just capped. We are just raising the caps. We are not interfering with planting flexibility, for farmers to make their own decisions. In fact, we are enhancing the flexibility of farmers to market their commodities when it is advantageous for them to do so. Then, I know we keep hearing the old refrain about keeping Government out of agriculture.

Mr. HARKIN. Mr. President, how much time does this side have remaining?

Mr. HARKIN. I yield myself 20 minutes, to begin with.

Mr. HARKIN. How much time do I have left?

Mr. HARKIN. It is fully within the chairman's right to do that.

Mr. HARKIN. I understand that. I hope we have an up-or-down vote.

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

Mr. HARKIN. So we hear the old refrain, get the Government out of agriculture; give the farmers more freedom. That is what this amendment does. If that is what you like, this amendment gives the farmers more freedom. I just ask my colleagues, what kind of freedom do they have in mind when they talk about giving farmers freedom? The freedom to be forced out of business by events beyond their control? As I said yesterday, I read a comment in the newspaper by one of my colleagues here who said they wanted to give farmers more ability to manage their destiny. I said, I do not understand that. How can my corn farmer in Iowa manage El Nino? How can my soybean farmer in Iowa manage the disastrous Southeast Asian economy? How can our wheat farmers manage the subsidies that other governments give their wheat farmers to compete unfairly with us? How can those wheat farmers manage the disastrous scab disease that we have had in some of our northern Great Plains States? These are all events that are beyond their control. Is this the kind of freedom that my colleagues have in mind for farmers? To be forced out by events beyond their control? The freedom to be forced to sell their crops at a loss because they cannot afford to hold onto them or get a decent loan to be able to market it when prices improve a little; is that the kind of freedom we have in mind? Is the freedom that my colleagues have in mind the freedom to struggle at poverty-level income while growing the food for our Nation? Is it the freedom for farmers to take less and less and less of the consumer dollar? Is that the kind of freedom they have in mind? Well, we have heard a lot of arguments on this amendment. It has been claimed that farmers receive more money under the 1996 farm bill than they would have under the continuation of the 1990 farm bill. That is true for the last 2 years when commodity prices were high. You have to understand, in the 1996 farm bill we gave farmers all the planting flexibility, but there was this payment called the Agriculture Market Transition Act payment, AMTA payments, without any payment limitations. No matter what farm income was like, you got a paycheck. I always thought that was kind of ridiculous. I had a farmer come up to me once in Iowa last year, after the previous year's crop, and he said, ``Gee, I had one of the best years I have ever had. I had a great year, and I got a paycheck from the Government. What are you people thinking about?'' See, I always thought that Government safety nets ought to be there when prices were low. If a farmer can make their money from the marketplace, that is the way it ought to be. But when there are events beyond their control, like bad weather and bad markets and interference by foreign governments, that is when the Government has to come in with a safety net. The last couple of years farmers got Government payments. But for this year--when prices are in the tank--for wheat farmers they will have less income protection than they would have had under the 1990 farm bill. According to current USDA price estimates, per-bushel payments to wheat farmers would have been 40 percent higher under the 1990 farm bill than they are scheduled to be under the 1996 farm bill this year. That difference would amount to nearly $22,000 for a farmer with 1,000 acres of wheat. One might infer that these farmers got these Government payments, and they could have taken these payments and sort of invested them and put them in the bank, so to speak, to get them through this year. Sounds nice. But is that really what happened? Hardly. First of all, a lot of farmers were paying off buildup debt, No. 1. They used the payments for that. No. 2, what happened was, a lot of farmers who rent found that their landlords increased the rent. Why? Because the landlords knew the farmer was going to get this Government paycheck, knew exactly what he was going to get. So the landlords raised the price of rent. Consequently, a lot of farmers did not even see the Government payment that came out in the form of that cash payment under the 1996 farm bill. A lot of farmers did not even get that money. But I will tell you who did get the money. The big farmers. The larger the farmer you are, the bigger the check you got over the last couple of years. And the larger the farmer you are, the better able you are to go through periods of stress. So it was all kind of screwed up. The bigger farmers got the most money over the last 2 years when prices were high. Now, when prices are low, our smaller farmers can't get enough help. The bigger farmers are able to get through it because they have more equity. Now we are going to say we can't even modestly raise the loan rates? I don't know, but I would think wheat farmers out there who are suffering would say they could use the ability to market their wheat over the next 15 months rather than have to sell this fall. Right now, the wheat loan is $2.58 a bushel. We are just asking to raise it to $3.22 a bushel. That is not a lot of money, but it might be a little bit of help. As I said, I think we checked the wheat in Dodge City, KS, yesterday--$2.50 and going down. The first of July, it was $2.64. Now it is down to $2.50 and going down every week. So our wheat farmers and our corn farmers need some help. I talked about farmers getting less and less of the share. This chart shows the farm share of the retail beef dollar, going down all the time. So for every dollar, when you buy that steak or you buy that hamburger, the farmer is getting less and less from the dollar you spend for it. Here is the pork dollar. Every time you buy a pork loin roast or one of our delicious Iowa chops--if I can put in a plug for that--our pork farmers are getting less and less of that dollar you spend for pork. Here is the wheat prices--farm-level wheat price. Here is when the Freedom to Farm bill was enacted. Here are the wheat prices, going down, over the last couple of years. Same thing for corn. Here we are coming up to Freedom to Farm; down it comes. So corn prices are going down, also. There is a crisis out there. We are not talking about increasing consumer food costs or livestock feed costs, nor are we going to price the United States out of world markets. If the price of the commodity is below the loan rate, the farmer can sell at that lower price and repay the loan at the going market price. So the marketing loan does not prop up the U.S. price among world market prices. Hence, there is no adverse impact upon U.S. competitiveness because of this amendment. Taking the cap off will help our farmers stay in business. The fact is, it may be the only thing that will keep them in business for another year. Again, we have heard all these arguments, but for the life of me, I can't understand--I can't understand--why we on one day can say there is a crisis in agriculture, Congress has to respond, and 99 Senators vote for that; the next day, we want just a modest increase in the loan rates to help, and we can't do that? I hope that is not so. I hope we do this today. Lastly, I heard the distinguished chairman of the Agriculture Committee talking about getting fast-track legislation through, as if somehow that is going to help prices this year. Even if fast track were to pass this year, it would take several years to conclude agricultural talks. I point out, the last Uruguay Round of multilateral talks took 7 years. Keep in mind, even if we got fast track through, that is not going to mean a darn thing for 3, 5, 6, 7 years. That will not help this year--not going to help a bit. Second, the crisis is now, not 7 years from now. It is right now. Sometimes we have short memories around here. We talk about, yes, we will do all this stuff; we are going to get our trade going again.

Mr. HARKIN

Mr. HARKIN. That is the pending matter before the Senate. Mr. President, I note the presence of my colleagues from the Midwest and the Northern Plains States who are here on the floor. I think we have to really lay out for the American people what is happening in rural America today. We can close our eyes to it. We can try to ignore what is going on, but the fact is, there is a crisis of immense proportions happening all over rural America. In our sense-of-the-Senate resolution, we pointed out that net farm income for 1998 is projected to fall to $45.5 billion. That is down 13 percent from 1996. Now, with farm income going down 13 percent--I asked my staff to check and see what Wall Street did last year. The S&P 500 index went up 36 percent last year; farm receipts down 13 percent. Farm debt for this year is expected to be $172 billion, the highest level since 1985. So what we say in our sense-of-the-Senate resolution is: . . . emergency action by the President and Congress is necessary to respond to the economic hardships facing agricultural producers and their communities. Very simple. Very straightforward. It is an emergency situation and requires emergency action. Mr. President, this chart really says it all, what happened to farm income between 1996 and 1997. Let us see, 32 States had a drop in net farm income--32 out of 50. Now, some of them, you might see, had a big increase. Oklahoma was up 94 percent and Kansas 28 percent and Wyoming 73 percent. That was simply because of the devastating drought they had in 1996, and their wheat crop recovered in 1997, and it looks better. But the prices there--and I will get to that in a moment--are still catastrophic for the wheat farmers all up and down the wheat belt. But look at the other States: Minnesota, down 38 percent; North Dakota, down 98 percent, a 98-percent drop in farm income in the last year; New York State, 44 percent; Pennsylvania a 32-percent decrease in farm income. Wall Street is doing great. Standard & Poor's is up--what did I say?--36 percent. Yet the ag economy in New York State went down 44 percent. That is the story across America. That is why we have a crisis. Look at prices here, and you will find something, Mr. President, very interesting about these charts I am about to show. Here is the farm level corn price. We were coming up here in the early 1990s, and we had a steady increase, a little drop, but kept coming up. Right here is the Freedom to Farm bill, and, bang, down it goes. That is corn. Is that an anomaly? Let's look at wheat prices. We were bouncing around, but we had steady progression up all the time. We enacted Freedom to Farm, and down it comes. Wheat prices have been coming down ever since Freedom to Farm was passed. So that is corn and that is wheat. Farm-level soybeans. Soybeans were coming up gradually, getting better, and we get here to Freedom to Farm, and down it comes. All of those crops, ever since Freedom to Farm, down they come. Here is the other interesting thing. We can look at the corn and the wheat and the soybean prices. But let's look at the farm share of what is happening to how much farmers are getting from their products that are sold in grocery stores. Right now, the farm share of the pork dollar is at the lowest point it has been in over 2 decades--in over 20 years. Iowa hog farmers, and hog farmers around America, are getting the lowest share of the retail dollar. So if prices have been declining, as I pointed out here for soybeans and for corn and for wheat, how come we haven't seen the price dropping at the grocery stores? Not a bit. Prices continue to go up, and yet the share of that dollar for our farmers keeps going down. That one is pork. Let's take a look at beef. Here is the retail share of beef, which has been coming down all the time. It keeps coming down. Maybe it is not quite as bad as pork, but it is still pretty bad. So farmers get less and less. Now, I noted that in the Washington Post this morning there was a story about our plans to do something to help the farm crisis in America. It said here, ``While Democrats in both chambers want to help farmers by revamping domestic farm supports, Republicans say aid will come from more aggressive pursuit of exports.'' Interesting. We are going to solve it all by exporting more. Well, let's look at two charts here. I heard a lot of talk about getting rid of sanctions. We are all for getting rid of sanctions. Here is a chart that shows how much agriculture is being affected in terms of sanctions and how much it is being affected by the fact that IMF is not being replenished, so they can continue to straighten out the economies in Asia. Trade sanctions reduce U.S. exports by about 1 percent of the total. That is the USDA estimate. Here is IMF-affected trade coming in at about $35 billion because of the lack of funding for IMF. Who is holding up the funding for IMF? The leadership in the House and the leadership in the Senate. We will hear a lot of talk about sanctions. But if you really want to get at what is affecting our farm exports, it is the lack of funding and replenishment for IMF. But, Mr. President, is it really exports that are going to solve our problem? Here is U.S. exports on this chart going clear back to 1960--what we see here, hitting 1970 and in the 1970s and then the 1980s. We had a dip in 1985 because of the farm crisis, and then up and up and up. Look at the increase in U.S. agricultural exports. It is down a little bit now from its peak a couple years ago, down 7 percent. But it is still a huge increase over what we have had in the past. That is not the total answer to our problems. Yes, we need to replenish IMF; yes, we need to continue our strong support for exports. But that won't solve the problem. The problem is that we have pulled the safety net out from underneath the farmers in this country when we passed Freedom to Farm a couple of years ago--the so-called ``Freedom to Farm.'' I called it at that time the ``freedom to go broke'' bill, talking about our family farmers. Now, some say, well, what we have to do is, we have to get EEP in there and we have to do more to get our exports going overseas. But the fact is, that would put more money in the pockets of the grain traders and importing companies and not the farmers we all represent. Some commodity groups want to spend several hundred million dollars on the Export Enhancement Program and other export programs. But who is it going to help? That money will go right into the pockets of the exporters, the big grain companies, and the importing countries. It is not going to go to the farmers. I call that the sparrow feeding the horse kind of analogy. If you want to feed the horse, you feed the sparrow. Then the sparrow drops something on the ground; that fertilizes the grass; the grass grows, and the horse eats it. That is a crazy system. If you want to get money to farmers, then what we have to do is, we have to put in some supports and put that safety net back in there. A 1994 General Accounting Office study found that direct payments to producers increased net income of farmers much more effectively than an equivalent level of indirect support through subsidies granted under the export subsidy program. GAO. Direct payment of producers gets their net income up more effectively than putting that money into EEP. Again, a lot of farmers were told that we had to pass this so-called Freedom to Farm because it gave them flexibility. We were all for flexibility. We had that before under the Carter administration. We had the whole farm base at that time. We all wanted to give farmers more flexibility for the whole farm and let them make the decisions. But we wanted to keep a safety net there. This so-called Freedom to Farm is fine when prices are high, fine when you have the big payments going out to farmers in the initial 1 or 2 years. But when disasters come, as they will in agriculture, as they have since biblical times, when the prices go down, then what happens is, our family farmers are squeezed out. It almost seems like the so-called Freedom to Farm bill really was designed with only the largest producers in mind. Why do I say that? Because when you get a downturn, when you have low prices, the big, well-financed producers can weather it. They can get through 1 or 2 or 3 years of low prices. But for that smaller family farmer out there, they can't do it. That is why you are now going to see farm bankruptcies again, as high as they were during the 1980s.

Mr. HARKIN. The Senator knows about what I am about to say because I know he has been through this, and that is what I think a lot of consumers and what a lot of people have to understand about farming in America and about our family farms. Farmers are price takers. In other words, a farmer has a lot of fixed costs over which that farmer has no control--land, seed, fertilizer, chemicals. The farmer who goes down to get his seed can't say, well, my prices went down last year. I will buy that, but I can give you 10 percent less. The farmer has zero bargaining power. He pays the freight. Whatever it is, that is what he has to pay. So the only way for that farmer to make anything is through the price that the farmer receives, price plus his production. Now, if the price is so low, no matter what he produces, he can't produce himself out of the hole. That is another little anomaly that I have thought about in all my years here and working in agriculture on the agriculture committees. People say, well, if prices drop--see if this doesn't ring true with my friend from South Dakota. A lot of ideologues say, well, if prices drop, farmers will take that signal and they will plant less. But we know what happens when a farmer has a fixed unit of land and he has his fixed machinery and prices drop. They say, how can I get more production out of that unit of land to cover the lower prices? And so what happens is you get a drop in the prices. Farmers plant more because they have a fixed amount of land. They want to squeeze more production out of it. That has happened time after time after time in American agriculture. Yet some people do not seem to understand that. So they have to have the price plus production or they are going to go broke, and that is what is happening today. I believe it was attributed to former President Kennedy--I can't be certain about this. But I think former President John Kennedy once said that a farmer is the only man in America who buys at retail, sells at wholesale and pays the freight both ways. That is very true today. That is why we are having this crisis in America. Now, again, I am all for farm flexibility and giving farmers the maximum flexibility. But we have to have a safety net in there because it is as true today as it was in biblical times. I guess we just never seem to learn it. I have here a letter that was sent to a number of us from Mr. Dwayne Andreas, chairman of the board of Archer Daniels Midland Company. I found this to be a fascinating letter. Now, obviously, Andreas heads a large agribusiness that takes the raw food shipments and processes them and makes them into articles that we see sold all over the world. I am sure we have seen his ads on Sunday ``Meet The Press,'' ADM, which is the supermarket to the world. We have all seen that and they do a good job. So here is an individual, the head of a large company that buys the raw products, processes them, turns them into something that is sold in supermarkets in places around the world. Interesting. He sends a letter dated June 18. He said: I feel the urge to say something about present farm policy. I could write pages about why support prices are necessary to protect farmers from the excesses of speculators. It was a bad idea to remove all the support prices from under farm commodities and if left alone it will lead to disaster. The side effect of a drop in farm income affects all U.S. businesses and can be devastating. Only those of us with long-term memory seem to be aware of that. The country shouldn't have to learn it all over again. Although, of course, it is legendary that people in my line of business can benefit from free falling farm prices by buying bargains, I feel that stabilized agriculture is extremely important for America and for the world. I hope you will work to restore some form of price support to protect farmers from disaster. Subsequent events prove it has to be corrected, not just for the benefit of farmers, but to stabilize the economy of our Nation. People seem to ignore the fact that no genuine free market is left in this world. Governments everywhere manage farm prices and the U.S. will have to follow suit or face disaster. I find that interesting, coming from the head of perhaps one of the largest manufacturers of agricultural products. As he said, it is legendary that it would be in his best interest to have low farm prices. But I think what we have seen from Andreas is the statement of a statesman and someone who understands what it means for our entire economy and for our Government and, indeed, for hungry people around the world to make sure that our farmers have a decent price. So I applaud Andreas for making that statement and taking the position he has taken, which probably is in direct conflict with his economic best interests. Why I remembered that letter is he said those of us with memory long enough. And I have said it time and time again. It started in biblical times with Pharaoh's dream, and he asked Joseph to interpret the dream. And Joseph said what it means is during good times you store up the grain so you have it during bad times, 7 years of plenty and 7 years of famine. Through the ages, governments everywhere have learned and relearned that lesson. And yet for some reason, under the Freedom to Farm, so-called Freedom to Farm bill that we passed here a couple of years ago we said that is all over. Evidently, farmers are going to have high prices from now on. Well, they have short memories, and they probably haven't been reading the Bible either because if they had they would know that this has plagued us for thousands of years.

Mr. HARKIN. I yield for a question.