Richard Lugar

Mr. LUGAR

Mr. LUGAR. I ask unanimous consent the reading of the amendment be dispensed with.

Mr. LUGAR. Mr. President, the dilemma for the small farmer is compounded because, in essence, as overproduction occurs, prices remain very low. That hurts large farmers, too. But, as a matter of fact, many large farmers are large because they are efficient farmers. They do the research. They learn about the marketing tools available in futures contracts, forward contracts. They employ the proper conservation procedures and have the capital to do so. As a result, it is not surprising that despite each of our farm bills--and the argument has been made every 5 years or 6 years, or however often we do this, that we are going to save the family farm-- that in fact there are fewer family farms each time around. That, some would point out, has been true from 1900 onward--perhaps before that time. One of the strange things about farm statistics presently--and I will not analyze this in depth--is there has been an increase in farms that are fairly small. These apparently are farms that are purchased by professional persons who want some room around their residences. If they produce on those premises at least $1,000 worth of agricultural produce or animals, then they qualify as a farm in the sense of this definition. So this has led to a certain expansion, in some States, in which this would be counterintuitive. But the heart of the matter is that about 350,000 farmers out of the 1.9 million who do at least $1,000 or more, those 350,000 do roughly five-sixths of the bill, all of it, in terms of crops or livestock. So essentially some have said farm policy is aimed toward them. But at that point, very clearly, Senators rise and say: Hold on. That leaves 1.6 million entities out there, and some of these are family farmers. I know them. They are my constituents. I would simply say the degree of concentration, often lamented, continues fairly rapidly. It does so, in part, because our farm bills, with very generous subsidies, support loans from banks and they have apparently led to an increase in land values in most States. That I witnessed with regard to estimates and appraisals on my own property in Indiana from 1956 onward. I have had responsibility for that farm. It is exciting to watch. Thank goodness we did not have to buy and sell during that time; we could simply watch the changes in the balance sheet. But clearly it was an exciting experience throughout the 1970s, watching land values, as Purdue estimated them, go up and go up, sometimes by double digits in a single year. So as I took a look at my 604 acres and began to multiply by 2 or 3 those values, that was pretty exciting. It was pretty depressing; after Paul Volcker and others put the skids on interest rates to try to take the Federal Government off in a different way, the value of farmland in Indiana plunged by as much as 50 percent to 70 percent. That kind of jarring situation, many farmers who have lived a long time have become used to. But we are now, much more mildly than in the 1970s, but progressively, seeing those land values increase. For the general public, this seems strange. The general public looks in on farming, and they ask: Why are farmers coming into the Senate pointing out that the prices have never been so low? The prospects have rarely been so dim with people lined up at the country banker failing to get loans, and all the signs are that even farmers who appear to be fairly prosperous are near bankruptcy. The USDA illustrates this fine point. They point out that as you look at the balance sheet for all of American agriculture, the assets have been rising throughout the last 5 years. As a matter of fact, the net worth of farmers has been increasing. How can this be if operating results are so dismal? In fact, operating results have not been that dismal. In the year we just finished, 2001, it appears that cash income is $59 billion for all of American agriculture. That is plus-$59 billion--not negative. But the real change comes in the asset value of farmland. With the pricing of land moving up, it is apparent that on paper the net worth of farmers is increasing substantially. I make that point because many bankers, as you visit with them--as the distinguished Presiding Officer certainly has--would say we are counting on these farm bills to keep those values up. Why do you think we are prepared to loan more money or even any money without some assurance that farmland not only retains its value but nevertheless has a robust quality to it? We then get into a problem in which farmers say: Hang on. Whatever may be the justice or injustice of the farm bill, if you tinker around with that bill very much, you are going to create anxiety with country bankers. They may not make loans. At that point, then we have a real problem. It is not my purpose today to try to precipitate a decline in land values. That would be destructive not only of my own farm but to all my neighbors. I just observe, however, that without describing a bubble phenomenon--because it is not that; farms are not dot.coms and not electronic situations--there is value there. But we need to be thoughtful in terms of our policies as to how much steam we want to generate into what some would call false values--increases clearly not justified by implied income flow coming from those properties. The dilemma, of course, for the young farmer we have talked about--we have a section in our farm bill that tries to address credit for young farmers--is that it is extremely important if we are to have entry of our young people. As most have pointed out, the average age of farmers seems to increase every year. Demographers indicate it has been true for quite some time. It has been proceeding towards the high 50s. That is not a healthy situation. That is not a healthy situation for a growing, prosperous industry, but it reflects the realities of young people coming through our agricultural schools. The vast majority go into what might be loosely called agribusiness-- not production farming. They are dealing with products that come from that, or marketing, or the espousal of farm interests in foreign trade, what have you. These are valuable skills. But the number of persons heading back to head up these family farms to keep the continuity going appears to be fairly limited. Some years are better than others. The distinguished Presiding Officer has visited the excellent agricultural facilities with educational opportunities in Georgia, as I have at Purdue in our State. We encourage young people to farm. Some do. Some years are better than others. But for some years, there appears to be very few candidates for that. One reason is it is very hard for a young farmer to get credit and to establish a landhold. If you are in a family farm now, that is your best bet. As inheritance tax reforms have occurred, many of us have pointed out they needed to occur because the family farmer is 15 times more likely to be visited by the inheritance tax than other ordinary citizens. The assets are tied up in the land, in the buildings, the visible assets. But if a family can work that out, there is some possibility for the young person. These are fairly small percentages of situations. I think that is a disturbing trend but one that current farm bills, I believe, have accelerated. There is also the fact that as we discussed the last amendment on limits, some pointed out that farmers, in fact, are renting land from those who have estates, or elderly persons, retired farmers, and others. Indeed, a lot of renting does go on. The 120-page USDA booklet indicates that 42 percent of farmers who are now involved in production are renting land. Only 58 percent own the land they are farming. That is a fairly large number. Our farm bills have the tendency to raise the rents in the same way that they have raised the land values; in the same way they raise the possibility for larger loans for expansion or for accumulation of other farmland. None of these trends are new and none should be shocking. Many farmers, as well as Senators, say that is just the way the world works. These are trends that are in place, and we are only going to tweak the system a little bit and hopefully not disturb it a lot, although some Senators have greater ambitions for the farm bill. They believe, in fact, that a very sizable change is going to occur if over a 10-year period of time, as the House of Representatives looks at it, you put $73.5 billion of additional money into American agriculture on top of the baseline of the regular programs we now have. So a lot of our debate in November and December revolved around the $73.5 billion, as Budget Chairman Conrad said it is. Ultimately, the Bush administration said: Well, we are going to acknowledge that it is there now, and in this year, and so forth. But there now appears to have been an argument over the situation. But some of us looking into this--I am one of them--said it wasn't in November, and it isn't there now. We do not have the money, and, therefore, we have to be thoughtful about it. I simply add that everybody--the President and Senators in both parties--wants a farm bill. The question we are discussing today is not whether we should have a bill or not. The amendment that I have offered substituting for the total commodity package still, by my own admission, is that it is going to cost $25 billion over 5 years--not $44 billion over 5 years but $25 billion. But it is still a sizable sum. The basic difference in my approach is that I take seriously the thought that we ought to have equity in the payments. By that, I mean they ought to be available to any farm family wherever that family may be in America and whatever that family produces. That would be a revolutionary step. That is what I am proposing. I started by saying 60 percent of farmers are outside the game altogether. I want to bring them in. They will occasionally come in when we have disaster relief debates-- perhaps a strawberry crop in a State or a peach crop or a problem of cranberries in New England comes to the fore. Senators in that State say we have had a disaster brought about by weather, usually, or some other problem. Therefore, we need relief. On an ad hoc basis, the Senate from time to time in the appropriations process plugs in some money for what is known as specialty crops or crops other than these five major row crops. From time to time, we have done something for livestock but not very much. We had a debate yesterday about the EQIP program. This has been a way of trying to bring some money so that manure could be controlled and other environmental circumstances surrounding a livestock operation. The bill that the distinguished occupant of the Chair and I have been involved in on the Agriculture Committee does a lot more for the EQIP program. There has been a long line of people waiting to make those changes, so that will be helpful both to production in livestock as well as the environment and the counties that surround it. But at the same time, livestock people, aside from the pork dilemmas of 2 or 3 years ago when prices reached rock bottom, have not gotten the subsidy. Sometimes people have wondered historically, why not? They were back in the 1930s when all this began to be passed out. Why haven't we been in that tradition? But, nevertheless, some, by diversifying, have corn farms, say, and get the money in that route, by spreading at least the risk, and they have imbibed in the farm subsidies in some fashion. All I am saying is, there is no equity, farm by farm, in the farm bill as we have known it. So I want to provide that. I want to say, in essence, three things. One is that my bill would send money to any farm entity that has at least $20,000 of gross agricultural income coming from it, not the $1,000 which has been the definition of the family farmer. That is too low. It picks up what I think are clearly the so-called hobby farms or the almost incidental farming that occurs. Some might say: But $20,000 is not much of an activity. Nevertheless, in some parts of the country--and given the history of some farms--that appears, to me, and to many economists who have looked at the subject, a reasonable threshold point. So let's say I am a farmer--male or female--on a farm anywhere in America, producing anything I want to produce, and I can sell it for $20,000. I would qualify, under my amendment, for a $7,000 payment from the Federal Government each year for 4 years, starting with fiscal year 2003, and going through 2006, so long as I continue in the business. I would have to do the $20,000 each of the 4 years. This would not be a historical record but an actual record that I am a farmer and I am doing that kind of business. And the question is raised, what if you have a situation in which there are two factors here--one a landlord and one a tenant or two farm families, one owns the land and the other provides the machinery and some of the labor, or what have you. Both of these entities could qualify for the $7,000 payment if both are at risk. If the landlord is simply getting the rent, without risk, then the landlord does not get the $7,000. The tenant gets the $7,000. He has the risk. So it is a question of being at risk and with at least $20,000 of income. Then you receive $7,000. I make the point that this finally, then, gets us to the threshold question of why we have farm bills and why we have income security. My idea is that we provide income security for the vast majority of farmers in this way. It means the very large farmer still gets the $7,000. We will not be having a debate about $275,000, however. That really moves off into past history. I am talking about $7,000 for each farm family at this point. That raises the question for skeptics of all programs: Why do you send $7,000 to a person in America because he or she is a farmer? We have settled that, I suppose, by all of us saying, several times, that we understand there are abnormal risks from weather, from foreign trade, from all the vagaries of history. It may or may not be totally just to those people who make their money at the retail store on Main Square or to those who venture capital into new businesses and lose it or to a whole lot of people who make livings in various ways, but what we are saying is we believe it is important to have a safety net. What I am saying is, it should be just that, a safety net, not an incentive to produce more and, thus, depress prices, or an incentive to accumulate land using abnormal land values to borrow money, knowing that at some point this cascade is almost bound to lead to difficulty. It ought not to be a program that excludes young farmers and one that is purely prejudiced against those who rent. And it ought not to be a program in which six States receive 50 percent of the money. This really does indicate in every State there are agricultural interests, but they are diverse and they are different. Where there are more farmers, the State will get more money. That is true of distributions of all sorts. Having sort of recited the outline of where I am headed with this, let me say I believe the amendment I have offered will achieve each of the goals I have in mind: less money paid by the taxpayer, greater equity to all farmers, a genuine safety net, a policy that does not distort land values, does not depress prices, and, finally, does not lead to real problems with our trading partners, whether it be in the WTO or any other trading arrangement. We debated that issue yesterday as to whether the current text of the farm bill, before amendment, leads to bumping up against the $19 billion cap. In my judgment, and that of many others, we risk that. The FAPRI group--the research people at Iowa State and Missouri--said there is a 30.3-percent chance that will occur in 2002, as a matter of fact. That really does jeopardize American agriculture. We can say we do not care what the rest of the world thinks about all this and, after all, that the Europeans are subsidizing in a big way-- maybe some others--but we need every dollar of export income. We cannot have countervailing suits or retaliatory mechanisms that abnormally affect certain crops as countries try to find where we are vulnerable and arbitrarily knock out one group of farmers while they are trying to hit the whole system. Furthermore, we are the leaders in world trade. We are the people who really want to expand this. We have to do that if we are genuinely thoughtful about the future of American agriculture. To take some type of a myopic view that we simply deal with ourselves leads, finally, to the fact that is all we will be doing, and it is a limited market. So given the extra incentives, prices will inevitably go down and stay down because there is no outlet in terms of American agricultural genius. Let me point out that agricultural subsidies have been distributed according to acreage. Some have said that is the way it ought to be: You do more, you get more. I understand that. To some extent, I recognize, as the Presiding Officer does, that this has led to a situation of roughly two-thirds of the payments going to 10 percent of the farms. USDA--more graphically getting down to this 350,000 I talked about--says 47 percent of all the money went to them, almost half to a very isolated group of people. They are very good farmers, but if that is the purpose of the farm bill, that is not what the rhetoric we have been hearing would bring about. The Daschle-Harkin bill spends the bulk of $120 billion on new fixed farm payments, on new countercyclical payments, on higher marketing assistance loan rates for program crops. It, likewise, extends, for dairy, the milk price support of $9.90 per hundredweight through 2006. It also creates a new national income support program. Overall, the dairy provisions are expected to cost $2.3 billion over and above the baseline. A new target price is created for peanut producers, and that is expected to cost $4.2 billion over 10 years, and nearly $700 million more than the House-passed peanut provisions. The CBO projects the Daschle-Harkin bill may cost $120 billion over 10 years, but its actual cost could be 25 percent or even 50 percent larger if commodity prices fail to rise. That is a pretty good bet. I don't see how they rise under these conditions. I am going to have another amendment in due course in the debate that will suggest we take the average payments of the last 3 years of the farm bill. Those have included not only the regular payments, baseline, AMTA, and so forth, but the supplemental legislation we passed each summer. These have been pretty heady sums of money all told. I am going to offer an amendment that will suggest that the payments, if we adopt the Harkin-Daschle approach, shall not exceed that average of the last 3 years, just so there are some stoppers with regard to some fiscal sanity in this bill. This becomes an entitlement. If you are out there and you produce the bushel, you expect to get the loan or the payment and not a lecture that, after all, we only budgeted $120 billion. That is not a part of this amendment, part of the next one, in the event I am not successful with this amendment. But if I am successful with this amendment, we have solved the problem. There is no doubt as to what the cost is going to be at that point, nor any incentive to overproduce. In fact, it is very likely that prices will rise as people make rational decisions on what to plant. Let me conclude this initial presentation by pointing out, for those who have not followed it from the beginning, that this is a complete substitute for the commodities title of the bill. That means all the programs involved in the commodities title would no longer be there and, in fact, in place is a payment of $7,000 to each farmer in America or each entity at risk of $7,000 for a 4-year period of time, providing the safety net I believe we want, with strong bipartisan support for that in a very predictable and equitable manner. I yield the floor and suggest the absence of a quorum. I ask unanimous consent that the time be equally charged to both sides.

Mr. LUGAR. Mr. President, I am pleased to announce I have received a letter from the Council for Citizens Against Government Waste, dated February 7, 2002. The letter states: Dear Senator Lugar: On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste, I am writing to inform you of our support for your amendment to S. 1731, the Farm Bill, which would replace current farm program payments with fixed annual equity payments to eligible farmers beginning in 2003. Your amendment provides equitable Federal assistance to all U.S. farmers and ranchers, and it saves taxpayers approximately $20 billion over the next five years. Current farm policy allocates two out of every three farm subsidy dollars to the top 10 percent of subsidy recipients, while completely shutting 60 percent of farmers out of subsidy programs. Your amendment will provide a more equitable farm program, a significant improvement over the present system, which provides the overwhelming percentage of government payments to large farms rather than smaller farms that are most in need of assistance. [The Council for Citizens Against Government Waste] will consider a vote on your amendment in the 2002 Congressional Ratings. It is signed by Mr. Thomas Schatz, president. I yield the floor and suggest the absence of a quorum, with the time equally charged against both sides.

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

Mr. LUGAR. Mr. President, USDA's Economic Research Service estimates that in calendar year 2000, the latest year for which this data is available, there were, in fact, 764,000 farms in America with an annual gross farm income of $20,000 or more. I cite that figure to give some idea of the number of farms that, given this threshold, we are discussing in this amendment. As I mentioned, on some of these farms there are at least two entities--maybe more--sharing production risk and having $20,000 at stake in terms of gross income. Each of these entities would qualify for a $7,000 payment. This means that those who have been scoring the amendment estimate there could be, under the widest interpretation, as many as 1.3 million payments of $7,000 a year. That is the basis upon which we arrive at the $25 million sum for all of the commodity section over a 5-year period of time. I make that point simply to undergird, for Senators who are listening to the argument, the financial aspects. I think it is of interest as to how this works out in real life. I cite once again the Environmental Working Group Web site with regard to my home State of Indiana. For the years 1996 to the year 2000, it breaks down the annual payments, not the 5-year total but the annual payments of farmers in my State. I cited earlier that in this particular situation, almost 100,000 farms receiving some payment have been identified. It is interesting that in Indiana about 75,800 of these farms received no more than $5,000 on an annual basis during this period of time. So this means, even if one extrapolates up into the next group, $5,000 to $10,000 where there were 9,500 more farmers, splitting that in half, roughly 80 percent of the farmers of Indiana, 80 percent who were receiving farm payments, received less than $7,000 in this period of time. That is why $7,000 per farm entity makes a significant difference to a large majority of farmers in my State. I think most Senators will find, if they do the arithmetic, $7,000 for a farm entity of $20,000 at risk, $20,000 gross but the farmer at risk, means anywhere from three-quarters upwards of actual farmers in the Senator's State will do better under my amendment than under the Daschle/Grassley bill. I hope Senators understand that. I am certain at some point farmers will understand that, and farmers presumably will hold Senators responsible for looking after their interests. So to underline the obvious, again, my statement is that roughly 75 to 80 percent of farmers who now would receive $7,000 in each of 4 years if they continue in farming will do better than the payments they would receive under the farm bill that is now before us. Clearly, if we are deeply interested in the majority of American farmers, especially those farmers who are most in jeopardy of losing their enterprises, we will be interested in this group. This is the safety net that is provided by my amendment. I yield the floor, and I ask unanimous consent that the time be equally divided against both sides.

Mr. LUGAR. Mr. President, I thank the distinguished chairman for his generous comments about my work and about my amendment, even though he has risen in opposition. Let me try to offer a word of assurance to the Senator as to the implications because it is certainly not my purpose to try to bring land values down or banking crises. I make this point once again citing from the Environmental Working Group Web site because it has very detailed figures on how much money people get now. For example, in my home State of Indiana, during the 1996-2000 period, 76,000 farmers out of the 100,000 who received money received less than $5,000. By definition, under this program, if they have $20,000 of income--that is the threshold--they are going to get $7,000. As you reach into the next bracket of $1,000 to $10,000, if you take half of those, we are up to 82 percent who are going to do better and 18 percent will not do so well. The fact is, if there are to be changes profoundly useful to four- fifths of my farmers, the other one-fifth might say they can't count on this subsidy. Indiana is not as skewed as many States are with abnormal payments, as I cited in the last debate. Only six farmers in Indiana would be affected by the $275,000 limit--not more than that. But out of 100,000, we affected six farmers. We are talking, it seems to me, in ranges that are not as cataclysmic as they may seem, but they do benefit three-quarters to four-fifths of the farmers of my State. The farmers I hear the most from are the other fifth. That may be true of the distinguished Senator from Iowa. Understandably, they are more aggressive, more articulate, and they have greater resources. If fact, their influence with the major farm groups seems to be substantially greater than the other three-quarters or four-fifths of my farmers. But, nonetheless, for Senators who are trying to decide what kind of jarring change this makes, I think it makes a sizable change for a large majority of farmers. Others would have to accommodate to the fact that they are already more successful, and the safety net was not meant for them specifically. Let me also mention that although I admit to the fact that all the money we are talking about is in deficit finance, I still indicated that I am prepared to advocate spending money. I would say that the farm bill--I may have left some confusion, and I want to clarify this-- I am in favor of. That would include all the titles the chairman talked about, plus the commodity title comes out to $25 billion in my amendment for 5 years at a time. The commodity portion of that turns out to be a net increase of only $7 billion. That is true because we are phasing out a whole raft of programs but not adopting many programs that are in the Daschle-Harkin bill escalating the current baseline. It is a fair question to always ask. Even if on paper the economics and the equities are right, what sort of jarring effect does this have on society? Probably there are people who want to walk around this a bit. Of course, that is the purpose of their debate: to define what we have to try to find. At least something is likely to be better not only for farmers--I think this amendment is better for three-quarters of the farmers--but also for taxpayers and for the general fiscal condition of the country. We are in a war and recession. I would simply ameliorate the associations made that this is likely to cause very jarring changes. I think there will be changes, but I think they are constructive. Essentially, we move the money in a safety net to a large majority of farmers, those whom I think are probably most in need and are most likely to go out of farming, as a matter of fact, without some type of subsidy. The distinguished chairman and I have generally agreed--and we had witnesses before the committee--that there is some equity at least in paying these moneys only if somebody is actually farming. That is one provision. In order to receive the $7,000, you have to produce $20,000 of gross income from the farming operation. You can't drop out for 2 or 3 years and on the basis of past history continue to collect the money. I am not going to argue about the philosophy of the AMTA payments and the idea that those would be phased out from one type of farm philosophy to another. It may not have worked out that way. But that was the general idea. I am not talking about a phaseout, but the idea that you really need to farm and be a productive farmer at risk in a farm entity to collect the money. I think that makes more sense to the American people as opposed to the many stories of moneys going to persons who have been out of the farming business for some time but had a history that fits these last farmers. Mr. President, I yield the floor.

Mr. LUGAR. Yes. You asked for alternatives. Clearly, there are a good number of people who are family farmers who intend or at least hope that their farms will be family farms for a long time. They are doing alternative planning.

Mr. LUGAR. Mr. President, I appreciate this colloquy with the distinguished Senator because I think we are probably dealing with values and issues which are very important even in the midst of an empty Chamber. I am hopeful other colleagues are listening in from time to time to this dialog. The dilemma we face, it seems to me, is not that the land values are going to come down, but rather that farmers will now have to plant for actual markets as opposed to planting for the Government. I think the prices, in fact, have some chance, under my idea, of going up again, in large part because I believe the policies we might adopt in the Daschle- Harkin bill are likely to depress prices. The hope is that will not be so and maybe world conditions or weather conditions, or something, might change. But it seems to me there is a history of stimulating overproduction and lower prices. That affects big farmers as well as small farmers. As I take a look at my own operation, we are somewhere in between. I sort of fit into the group that, according to the Environmental Working Group, would get about $9,000 a year under the current situation. I think the Web site lists the Lugar farm as 22nd in the batting order in Marion County, but that is in the Indianapolis area where there are just 240-some farms involved. But it is roughly $9,000 a year over a 5- year period of time we are talking about. It is a 604-acre farm, probably in the top sixth barely of the size of farms in the State. This is sort of the cutting edge when I am talking about the beneficiaries being maybe 80 percent. We are a little above that, and so, as a result, we are likely to lose a little money. My own view is that I am likely to make money because I think that probably the price of corn is more likely to go up, likewise the price of soybeans; therefore, in regular markets, as opposed to markets that are subsidized or have artificial stimulants in them, I am going to make more money. I think that will sustain my land value without a bubble and will make that price a healthier one. Of course, there are other factors in land values: proximity to cities, whether highways go through them, as the chairman knows--all sorts of reasons why that happens. But, nevertheless, our two States--Iowa and Indiana--have many characteristics. During my more intense experiences in Iowa in 1995 and 1996, I discovered that going county by county. I am sympathetic to the thought that change which is really ridiculous ought not to be entertained. It seems to me we are at a point where the idea that I have brought forward benefits a very large majority of farmers, and I think without harm to those who are more efficient because my guess is they will benefit the most from higher prices. They, by and large, have lower costs through research and through the methods they have adopted. This is likely to lead to more of a golden age for agriculture than what might be sort of a descending situation that many of us have been describing.

Mr. LUGAR. My theory is that less will be planted; fewer acres of corn will be planted and fewer acres of soybeans will be planted. I believe the current system, plus the additions that your bill would provide, offer incentives to plant more acres. I believe, given new, modern methods, and the research that we are both for, that is going to lead to higher yields--besides more acres--more bushels, and lower prices. That could change if we had a worldwide boom and our exporting thing works or El Nino knocked out half of one country's production. So these things happen from time to time. My guess is, to answer the Senator truthfully, many farmers, despite the Freedom to Farm, still have incentives to do basic row crops. That is where the money is.

Mr. LUGAR. Yes. For example, on my farm, we know that a bushel of soybeans is going to get about $5.43 no matter what the market price is. People lament that beans have been down close to $4 a bushel. Indeed, they are, but not for our farm, or for anybody else who really is involved in the farm program involving soybeans. So I want to maximize production irrelevant to whatever the market signals are because I know for every bushel of those beans I am going to get the $5.43. This is the way the world works. This is one reason why soybean production has been booming while prices have been falling. It need not always be the case. If there were no such loan, if I were not guaranteed the $5.43, then I really would have to be thoughtful about how many acres of soybeans I would plant. I would really have to begin to calculate how the world works in terms of markets as opposed to Government programs.

Mr. LUGAR. Yes. I would have to find an alternative crop that looked better for me. For the moment, my guess is that I would probably go to more corn, just as a practical matter. Corn is not so heavily subsidized. The $1.89 I am guaranteed is not as attractive as the $5.40 for the other situation. On the other hand, other farmers have calculated that, too. So they have planted less corn, not added more beans. They all might shift back, so it makes agriculture interesting.

Mr. LUGAR. Yes.

Mr. LUGAR. Yes.

Mr. LUGAR. I will make another radical suggestion. This is purely anecdotal from our farm experience. But I planted, over the last 18 years, 60 acres of black walnut trees. This is on acreage that I found was submarginal. We used to plant more, but it appears that sort of is a grandfather's dream. I will not be there. But you have, at least it seems to me--by all the calculations by the foresters who measure the growth year by year--more of a return from the walnut trees than I am getting from the corn. That is a very long- range vision.

Mr. LUGAR. I would respond to my friend that that probably frequently happens. Probably a majority of farmers will continue to plant about what they are doing now. What I am discussing really is at the margins, that overproduction has seemingly continued and maybe accelerated as the farm bill has progressed--not just the one we are in but the one before that. The control factor is something that the Senator and I have considered during our work on the Agriculture Committee with the crop insurance innovations. For example, this gives the farmer a lot of control. I would say in my own situation, I purchased the 85 percent crop revenue insurance this year. Before I planted, I knew I was going to get 85 percent of the income from my beans and corn of the last 5 years or the average period that was a part of the premium I paid. That is a lot of assurance. Then I can go more aggressively into the futures market, sell corn that I don't even have in the ground, or not planted it in the event that it appears to me circumstances are adverse. Farmers in the past didn't have those sorts of options. Some are not taking advantage of them now. Nothing in this amendment affects the crop insurance situation, which remains a very important part of this management of risk and control that we now have.

Mr. LUGAR. The chairman and I have been in entire agreement that we ought to be devoting more of our resources in this bill to research, to agricultural community development--really the bulk of the rural people are not farmers who are going to benefit.

Mr. LUGAR. The educational process for the young, as well as loans, and this important energy research. Clearly, if our country adopted an energy policy that featured the biomass, the ethanol, or other products that come from that, we would have a different farm scene. I pray that will occur, as does the Senator. But it won't, really, without a great deal of effort on our part. These are hopeful signs for the future. I think we both agree, we don't want to bump up against the WTO ceilings because that really would jeopardize our export position. And I have offered a prudent step that takes us way back from that apparently. I have a lot of government still here: $7,000 for maybe 1.3 million entities is a lot of government but, at the same time, a level that I think will not perversely accelerate the land value, overproduction, and really finally does cost a lot less money at a time that we are in deficit finance. I appreciate the Senator's thoughtful objections to this, but I persist nonetheless and ask for support of the amendment.

Mr. LUGAR. Mr. President, I suggest the absence of a quorum with the time evenly divided. How much time remains on both sides, if I may inquire?

Mr. LUGAR. I thank the Chair.

Mr. LUGAR. At least three-quarters receiving less than $7,000.

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

Mr. LUGAR

Mr. LUGAR. Mr. President, may I ask a question of the Chair? Is there 15 minutes of opposition time, minus the concession to the distinguished Senator from Iowa?

Mr. LUGAR. Mr. President, the legislation offered by the distinguished occupant of the chair contains provisions that respond, in my judgment, to a number of unintended consequences for the farm sector of our economy. I believe it is a matter of fact that in order for Senators to have a pretty good idea, at least, of how this amendment shapes up, a letter has come to me from a number of groups that are affected. Let me cite those groups. It was signed by the American Cotton Shippers Association; American Soybean Association; National Cattlemen's Beef Association; National Chicken Council; National Corn Growers Association; National Cotton Council; National Pork Producers Council; National Sunflower Association; United Egg Producers; U.S. Canola Association, and the Wheat Export Trade Committee. They have written the following letter, which responds to the Senator's amendment: The Senate Agriculture Committee may soon be considering legislation as part of the Farm Bill to address the issue of agricultural competition and concentration. This extremely broad legislation would give the U.S. Department of Agriculture unprecedented authority to regulate corporate relationships, commercial practices and contracts for the production of agricultural commodities. Tough laws already exist to ensure open and fair competition throughout the U.S. economy--including agribusiness. The current laws should be aggressively enforced. Creating new laws in an already complex regulatory environment is unnecessary and could result in serious unintended consequences. Legislation limiting the ability of agribusiness to attract the needed capital for future development could harm the constituents that this legislation is intended to serve. Risk is an ever-present element of agriculture and effectively managing risk is a fundamental goal of agricultural producers. The key to effectively managing risk involves the use of creative risk management tools. Farmers and ranchers have worked with agribusiness firms to develop creative solutions for managing risk. Implementing these solutions requires capital investment, and to attract the necessary capital, firms must offer attractive rates of return. Statutory and regulatory burdens that focus on agriculture--ignoring the broader economy--inhibit the ability of agribusiness to attract the necessary capital to stay competitive and provide innovative risk management solutions. Unique marketing opportunities and new products present premium opportunities for producers. Placing agriculture under an isolated legal umbrella could well inhibit progress and limit the ability of agricultural producers to adopt new and innovative systems that increase profitability and sustainability. Modifying existing laws and statutes could segregate agriculture from the rest of the economy, causing capital flight and hurting long-term growth, investment, competitiveness and success of agribusiness and consequently American agriculture. Several state legislatures have taken steps such as the ones we are concerned about, and the results have been negative not only for agribusiness, but for producers as well. For instance, South Dakota and Missouri passed well- intentioned price discrimination legislation that resulted in severe cash/spot market disruptions, and Minnesota has passed legislation that has hindered the availability of some risk management and quality-based production contracts. In this day and age, agriculture needs more capital and human investment in order to remain productive for the long term. The undersigned organizations will not support legislation that would create unfair regulatory burdens or cause scarce capital resources to be diverted away from agriculture toward other sectors of the economy. Sincerely, American Cotton Shippers Association American Soybean Association National Cattlemen's Beef Association National Chicken Council National Corn Growers Association National Cotton Council National Pork Producers Council National Sunflower Association National Turkey Federation United Egg Producers U.S. Canola Association Wheat Export Trade Education Committee I find merit in what has been suggested by these groups. I regret that the amendment would add, in my judgment, burdens and costs, restrictions, and more regulations for producers. It appears to me the tools that have been created are, in fact, both innovative and do help to manage risk. I hope they will be perpetuated. Processors use contracting, which is a specific subject of the Senator's amendment, to secure stable and consistent supplies of the products that the market desires, as well as increasing operating efficiency. A Purdue University study of agricultural contracting conveys the concern that legislation prohibiting or impeding contracting in agriculture could spur increased coordination in agribusiness. The study discusses the need for a contract in order for a process or to guarantee a quality and consistent product to consumers. I think that is the heart of the argument. In essence, contracting is helpful in managing risk. It is helpful, at least to the buyer, to make certain of the quality and quantity and the supply of what is required for the benefit of consumers down the trail. Therefore, I am hopeful that the amendment will not be adopted. I appreciate the spirit in which it has been offered. I hope Senators will take seriously the arguments I have presented and, even more importantly, the arguments presented by the distinguished list of agricultural producers that authored the letter I cited. I yield the floor. (Mrs. CARNAHAN assumed the chair.)

Mr. LUGAR. Yes.

Mr. LUGAR. It came in November of last year.