Richard Lugar

Mr. LUGAR

Mr. LUGAR. Mr. President, I enter this colloquy because I want to give a little bit of historical perspective, as chairman of the Agriculture Committee.

Mr. LUGAR. Yes.

Mr. LUGAR. The history of this situation goes back to the farm bill of 1996. At that time, the dairy provisions were the final issue to be compromised. At that time, the House and the Senate agreed upon a New England dairy compact for 2 years. The 2 years were to end September 30, 1998. During that time, the USDA was charged with the need to reform the entire dairy system and reduce the number of the arrangements for pricing from roughly 38 to 13. USDA acted this year. The Secretary promulgated some reforms that moved toward more of a market system. Likewise, the Secretary did not make further comment about the compacts because, under the law, they were supposed to be gone at this point. Obviously, they have not disappeared. A similar legislative predicament last year gave a wedge for the compacts to continue for another year in New England. Obviously, as the leaders have described it, that situation has occurred once again. Let me say, as chairman of the Agriculture Committee, we would like to reclaim the issue. It is in our jurisdiction. It is not in the jurisdiction of the people who worked this out. They had no right to do this. They have been widely condemned for doing it. There has been no debate on the compacts in our committee or on the floor, except for the ag bill. And they should have been gone by September 30, 1998, under those provisions. Likewise, although the House did decide to disagree with the Secretary of Agriculture, the Senate did not. The Senate did not have debate on this and, the fact is, the leadership of the committee wrote to commend our Secretary of Agriculture in a bipartisan way. Let me reassure the distinguished Senators from Wisconsin and Minnesota that the Agriculture Committee of the Senate will be eager to take up legislation that deals definitively with this situation. It will require a majority of the committee and a majority of this body and, likewise, some cooperation from the House. But that is the proper way to proceed. A suggestion has been made that we ought to be heard as a Senate. I suggest that that is the way we will follow. We will entertain legislation with regard to these issues at the earliest possible time and ask for the support of Senators who are here on the floor involved in this colloquy to help us in that quest. I thank the Chair.

Mr. LUGAR

Mr. LUGAR. Mr. President, I will vote for this final appropriations package, because I believe that, on balance, it is a good product. However, the situation we are in today is hauntingly familiar to that of a year ago, and my disappointment in the appropriations process continues. Last minute budgeting makes sound decisions increasingly difficult. We should reform the appropriations process to safeguard the interests of taxpayers and achieve a more balanced use of our time and resources. We all know that the appropriations process has grown to an inordinate length. We spend months holding hearings and negotiations, crafting sound public policy, only to scrap it in a hasty year-end scramble when we cobble together a bill negotiated by the White House budget chiefs and a few members of Congress. A 1996 CRS study revealed that budget matters eat up 73% of the Senate's time. I can't imagine we spent much less time on budget matters this year. As I have been recommending since 1993, along with our distinguished Budget Committee Chairman and many other Senators, Congress should adopt a two-year budget cycle, and do the budgeting in non-election years. This would double the time available for non-budget policy issues and for carrying out often neglected oversight duties. Our goal must be to engage in lawmaking in the deliberative manner the Founders intended.

Mr. LUGAR

Mr. LUGAR. Mr. President, I raise today in support of passage of the Conference Report to accompany S. 900, the Financial Services Modernization Act of 1999. During my first term in the Senate, I served as a member of the Senate Banking Committee. It was a busy time for the Committee: we passed the Foreign Corrupt Practices Act, permitted for the first time interest bearing checking accounts, and agreed to the Community Reinvestment Act. During those years, the Committee also undertook the difficult tasks of restructuring the finances for New York City and Chrysler Corporation. I am proud of the work we did on the Committee with these initiatives, and we made sure that the American taxpayers did not have to foot the bill for the restructuring of the debt. I am pleased that after all these years, we are on the verge of passing comprehensive reform that has bipartisan and Administration support. This bill will finally break down inefficient barriers between insurance, banking, and securities and allow United States financial services corporations to compete on an even basis with their European and Asian counterparts. Over the years, through regulation, court cases, and the development of new financial products, the line separating banking, insurance, and securities has been blurred. In recent years, banks have been selling insurance and mutual funds; brokerage firms have been offering customers money market accounts with check writing privileges. The market was dictating that the laws needed to be rewritten. I have always believed that the laws should be written by Congress, not bureaucrats. It has taken time to fine tune these changes and reach this bipartisan consensus; but Congress has finally met this challenge. Mr. President, over the course of the last five years, a lot of work and hundreds of hours have gone into perfecting this monumental legislation. I want to commend the Members of the Conference Committee, representatives from the Administration and the Federal Reserve, and the financial community for crafting a consensus piece of legislation. It will open competition, while establishing proper safeguards to protect consumer privacy and maintaining safety and soundness standards for federally insured financial institutions. In a free market society, competition lowers prices and raises the level of customer service. I believe consumers will benefit from this landmark bill by giving them the choice of products and services offered by more market participants. I am pleased to have this opportunity to speak in support of the passage of this long overdue legislation. I yield the floor.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on October 14, 1999, in SR-328A at 9 a.m. The purpose of this meeting will be to discuss risk management and crop insurance. committee on energy and natural resources

Mr. LUGAR

Mr. LUGAR. Mr. President, the Senate has begun consideration of the Comprehensive Test Ban Treaty. I regret that the Senate is taking up the treaty in an abrupt and truncated manner that is so highly politicized. Admittedly, the CTBT is not a new subject for the Senate. Those of us who over the years have sat on the Foreign Relations, Armed Services, or Intelligence Committees are familiar with it. The Senate has held hearings and briefings on the treaty in the past. But for a treaty of this complexity and importance a more sustained and focused effort is important. Senators must have a sufficient opportunity to examine the treaty in detail, ask questions of our military and the administration, consider the possible implications, and debate at length in committee and on the floor. Under the current agreement, a process that normally would take many months has been reduced to a few days. Many Senators know little about this treaty. Even for those of us on national security committees, this has been an issue floating on the periphery of our concerns. Presidential leadership has been almost entirely absent on the issue. Despite having several years to make a case for ratification, the administration has declined to initiate the type of advocacy campaign that should accompany any treaty of this magnitude. Nevertheless, the Senate has adopted an agreement on procedure. So long as that agreement remains in force, Senators must move forward as best they can to express their views and reach informed conclusions about the treaty. In anticipation of the general debate, I will state my reasons for opposing ratification of the CTBT. The goal of the CTBT is to ban all nuclear explosions worldwide: I do not believe it can succeed. I have little confidence that the verification and enforcement provisions will dissuade other nations from nuclear testing. Furthermore, I am concerned about our country's ability to maintain the integrity and safety of our own nuclear arsenal under the conditions of the treaty. I am a strong advocate of effective and verifiable arms control agreements. As a former Vice-Chairman of the Senate Arms Control Observer Group and a member of the Foreign Relations Committee, I have had the privilege of managing Senate consideration of many arms control treaties and agreements. I fought for Senate consent to ratification of the INF Treaty, which banned intermediate range nuclear weapons in Europe; the Conventional Forces in Europe Treaty, which created limits on the number of tanks, helicopters, and armored personnel carriers in Europe; the START I Treaty, which limited the United States and the Soviet Union to 6,500 nuclear weapons; the START II Treaty, which limited the U.S. and the former Soviet Union to 3,500 nuclear weapons; and the Chemical Weapons Convention, which outlawed poison gas. These treaties, while not ensuring U.S. security, have made us safer. They have greatly reduced the amount of weaponry threatening the United States, provided extensive verification measures, and served as a powerful statement of the intent of the United States to curtail the spread of weapons of mass destruction. I understand the impulse of the proponents of the CTBT to express U.S. leadership in another area of arms control. Inevitably, arms control treaties are accompanied by idealistic principles that envision a future in which international norms prevail over the threat of conflict between nations. However, while affirming our desire for international peace and stability, the U.S. Senate is charged with the constitutional responsibility of making hard judgments about the likely outcomes of treaties. This requires that we examine the treaties in close detail and calculate the consequences of ratification for the present and the future. Viewed in this context, I cannot support the treaty's ratification. I do not believe that the CTBT is of the same caliber as the arms control treaties that have come before the Senate in recent decades. Its usefulness to the goal of non-proliferation is highly questionable. Its likely ineffectuality will risk undermining support and confidence in the concept of multi-lateral arms control. Even as a symbolic statement of our desire for a safer world, it is problematic because it would exacerbate risks and uncertainties related to the safety of our nuclear stockpile. The United States must maintain a reliable nuclear deterrent for the foreseeable future. Although the cold war is over, significant threats to our country still exist. At present our nuclear capability provides a deterrent that is crucial to the safety of the American people and is relied upon as a safety umbrella by most countries around the world. One of the most critical issues under the CTBT would be that of ensuring the safety and reliability of our nuclear weapons stockpile without testing. The safe maintenance and storage of these weapons is a crucial concern. We cannot allow them to fall into disrepair or permit their safety to be called into question. The Administration has proposed an ambitious program that would verify the safety and reliability of our weapons through computer modeling and simulations. Unfortunately, the jury is still out on the Stockpile Stewardship Program. The last nine years have seen improvements, but the bottom line is that the Senate is being asked to trust the security of our country to a program that is unproven and unlikely to be fully operational until perhaps 2010. I believe a National Journal article, by James Kitfield, summed it up best by quoting a nuclear scientist who likens the challenge of maintaining the viability of our stockpile without testing to ``walking an obstacle course in the dark when your last glimpse of light was a flash of lightning back in 1992.'' The most likely problems facing our stockpile are a result of aging. This is a threat because nuclear materials and components degrade in unpredictable ways, in some cases causing weapons to fail. This is compounded by the fact that the U.S. currently has the oldest inventory in the history of our nuclear weapons programs. Over the last forty years, a large percentage of the weapon designs in our stockpile have required post-deployment tests to resolve problems. Without these tests, not only would the problems have remained undetected, but they also would have gone unrepaired. The Congressional Research Service reported last year that: ``A problem with one warhead type can affect hundreds of thousands of individually deployed warheads; with only 9 types of warheads expected to be in the stockpile in 2000, compared to 30 in 1985, a single problem could affect a large fraction of the U.S. nuclear force.'' If we are to put our faith in a program other than testing to ensure the safety and reliability of our nuclear deterrent and thus our security, we must have complete faith in its efficacy. The Stockpile Stewardship Program falls well short of that standard. The United States has chosen to re-manufacture our aging stockpile rather than creating and building new weapon designs. This could be a potential problem because many of the components and procedures used in original weapon designs no longer exist. New production procedures need to be developed and substituted for the originals, but we must ensure that the remanufactured weapons will work as designed. I am concerned further by the fact that some of the weapons in our arsenal are not as safe as we could make them. Of the nine weapon designs currently in our arsenal, only one employs all of the most modern safety and security measures. Our nuclear weapons laboratories are unable to provide the American people with these protections because of the inability of the Stockpile Stewardship Program to completely mimic testing. At present, I am not convinced the Stockpile Stewardship Program will permit our experts to maintain a credible deterrent in the absence of testing. Without a complete, effective, and proven Stockpile Stewardship program, the CTBT could erode our ability to discover and fix problems with the nuclear stockpile and to make safety improvements. In fact, the most important debate on this issue may be an honest discussion of whether we should commence limited testing and continue such a program with consistency and certainty. President Reagan's words ``trust but verify'' remain an important measuring stick of whether a treaty serves the national security interests of the United States. The U.S. must be confident of its ability to detect cheating among member states. While the exact thresholds are classified, it is commonly understood that the United States cannot detect nuclear explosions below a few kilotons of yield. The Treaty's verification regime, which includes an international monitoring system and on-site inspections, was designed to fill the gaps in our national technical means. Unfortunately, the CTBT's verification regime will not be up to that task even if it is ever fully deployed. Advances in mining technologies have enabled nations to smother nuclear tests, allowing them to conduct tests with little chance of being detected. Similarly, countries can utilize existing geologic formations to decouple their nuclear tests, thereby dramatically reducing the seismic signal produced and rendering the test undetectable. A recent Washington Post article points out that part of the problem of detecting suspected Russian tests at Novaya Zemlya is that the incidents take place in a large granite cave that has proven effective in muffling tests. The verification regime is further bedeviled by the lack of a common definition of a nuclear test. Russia believes hydro-nuclear activities and sub-critical experiments are permitted under the treaty. The U.S. believes sub-critical experiments are permitted but hydro-nuclear tests are not. Other states believe both are illegal. A common understanding or definition of what is and what is not permitted under the treaty has not been established. Proponents point out that if the U.S. needs additional evidence to detect violations, on-site inspections can be requested. Unfortunately, the CTBT will utilize a red-light inspection process. Requests for on- site inspections must be approved by at least 30 affirmative votes of members of the Treaty's 51-member Executive Council. In other words, if the United States accused another country of carrying out a nuclear test, we could only get an inspection if 29 other nations concurred with our request. In addition, each country can declare a 50 square kilometer area of its territory as off limits to any inspections that are approved. The CTBT stands in stark contrast to the Chemical Weapons Convention in the area of verifiability. Whereas the CTBT requires an affirmative vote of the Executive Council for an inspection to be approved, the CWC requires an affirmative vote to stop an inspection from proceeding. Furthermore, the CWC did not exclude large tracts of land from the inspection regime, as does the CTBT. The CTBT's verification regime seems to be the embodiment of everything the United States has been fighting against in the UNSCOM inspection process in Iraq. We have rejected Iraq's position of choosing and approving the national origin of inspectors. In addition, the 50 square kilomater inspection-free zones could become analogous to the controversy over the inspections of Iraqi presidential palaces. The UNSCOM experience is one that is best not repeated under a CTBT. Let me turn to some enforcement concerns. Even if the United States were successful in utilizing the laborious verification regime and non- compliance was detected, the Treaty is almost powerless to respond. This treaty simply has no teeth. Arms control advocates need to reflect on the possible damage to the concept of arms control if we embrace a treaty that comes to be perceived as ineffectual. Arms control based only on a symbolic purpose can breed cynicism in the process and undercut for more substantive and proven arms control measures. The CTBT's answer to illegal testing is the possible implementation of sanctions. It is clear that this will not prove particularly compelling in the decision-making processes of foreign states intent on building nuclear weapons. For those countries seeking nuclear weapons, the perceived benefits in international stature and deterrence generally far outweigh the concern about sanctions that could be brought to bear by the international community. Further, recent experience has demonstrated that enforcing effective multilateral sanctions against a country is extraordinarily difficult. Currently, the United States is struggling to maintain multilateral sanctions on Iraq, a country that openly seeks weapons of mass destruction and blatantly invaded and looted a neighboring nation, among other transgressions. If it is difficult to maintain the international will behind sanctions on an outlaw nation, how would we enforce sanctions against more responsible nations of greater commercial importance like India and Pakistan? In particularly grave cases, the CTBT Executive Council can bring the issue to the attention of the United Nations. Unfortunately, this too would most likely prove ineffective, given that permanent members of the Security Council could veto any efforts to punish CTBT violators. Chances of a better result in the General Assembly are remote at best. I believe the enforcement mechanisms of the CTBT provide little reason for countries to forego nuclear testing. Some of my friends respond to this charge by pointing out that even if the enforcement provisions of the treaty are ineffective, the treaty will impose new international norms for behavior. In this case, we have observed that ``norms'' have not been persuasive for North Korea, Iraq, Iran, India, and Pakistan, the very countries whose actions we seek to influence through a CTBT. If a country breaks the international norm embodied in the CTBT, that country has already broken the norm associated with the Non- Proliferation Treaty (NPT). Countries other than the recognized nuclear powers who attempt to test a weapon must first manufacture or obtain a weapon, which would constitute a violation of the NPT. I fail to see how an additional norm will deter a motivated nation from developing nuclear weapons after violating the longstanding norm of the NPT. On Tuesday the Senate is scheduled to vote on the ratification of the CTBT. If this vote takes place, I believe the treaty should be defeated. The Administration has failed to make a case on why this treaty is in our national security interests. The Senate is being asked to rely on an unfinished and unproven Stockpile Stewardship Program. This program might meet our needs in the future, but as yet, it is not close to doing so. The treaty is flawed with an ineffective verification regime and a practically nonexistent enforcement process. For these reasons, I will vote against ratification of the CTBT.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on October 6, 1999 in SR-328A at 9:00 a.m. The purpose of this meeting will be to discuss The Science of Biotechnology and its Potential Applications to Agriculture. committee on agriculture, nutrition, and forestry

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on October 7, 1999 in SR-328A at 9:00 a.m. The purpose of this meeting will be to discuss The Regulation of Products of Biotechnology and New Challenges Faced By Farmers and Food Business. subcommittee on forest and public land management

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on September 30, 1999, in SR-328A at 9 a.m. The purpose of this meeting will be to discuss the administration's agriculture agenda for the upcoming World Trade Organization meeting in Seattle.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce legislation to help our nation's farmers cope with the risks inherent in production agriculture. My colleagues are familiar with the challenges facing American farmers. Prices are down world-wide. Exports are lower than expected, in large part due to the economic problems in Asia. Weather problems, from droughts to floods, have plagued large portions of our country. The Senate has passed, and a conference committee is considering, an agricultural appropriations bill that contains emergency provisions to deal with these immediate needs. For the intermediate and long term, the Congressional budget resolution contains $6 billion for use in fiscal years 2001-2004 that can be used as direct payments or to help farmers manage risk. Given these available funds, the question for policymakers is how best to help farmers manage the risks that they face. Some suggest that the entire $6 billion should be used to alter the subsidy structure of the federal crop insurance program. I believe that risk management is broader than crop insurance alone. To keep U.S. agriculture competitive, farmers will have to consider a variety of practices including: engaging in sophisticated marketing practices; reducing debt; considering alternative crops; and purchasing crop insurance. An approach to risk management that focuses on the crop insurance program's subsidy structure is too narrow to address the many risks faced by farmers. In crafting my own risk management bill, I was guided by four principles. First, the greatest possible amount of the $6 billion should go directly to farmers. In the crop insurance program, private insurers receive substantial compensation for selling and servicing multi-peril policies on the government's behalf. Overall, the insurance companies receive about one-third of the federal financial support of the program. Farmers get the remaining two-thirds. In my view, farmers should receive more of the new federal spending. Second, the $6 billion should be provided in such a manner so that it does not distort planting decisions. Leading economists believe that crop insurance encourages the planting of crops on marginal and environmentally challenged acreage. Federal risk management spending should not inadvertently subsidize overproduction when world-wide agricultural stocks are already large. Subsidizing overproduction postpones the day when agricultural prices will rebound. Third, the $6 billion should be distributed equitably among farmers and among regions. In terms of eligible 1998 acres insured, farmers' participation by state ranges from a low of 4 percent to a high of 93 percent. Clearly, farmers in some parts of the country do not view crop insurance as a useful risk management tool. By spending the bulk of the increased federal assistance on crop insurance, we are denying farmers in some parts of the country risk management help. Fourth, farmers should be encouraged to pursue a variety of risk management strategies, including, but not limited to, crop insurance. Within broad parameters, farmers should be able to choose the risk management strategy that best meets their needs. Mr. President, the bill I am introducing today complies with my four principles. First, of the $6 billion in available new spending, over $5 billion is sent directly to farmers. Second, because the money is sent directly to farmers and is based on historical production, it is far less likely to distort planting decisions. Third, because it is not limited only to one form of risk management--crop insurance, it is more equitable among regions. Fourth, in order to better meet farmers' individual needs, it lets farmers choose risk management strategies from a menu of options. The bill directs the Secretary of Agriculture, for the 2001-2004 crops, to offer to enter into a contract with a producer in which the producer receives a risk management payment if the producer performs at least 2 of the following risk management practices each applicable year: 1. Purchase Federal or private crop insurance (e.g., private crop hail) that is equivalent to at least catastrophic risk protection, for at least one principal agricultural commodity produced on the farm for which federal crop insurance is available. 2. Hedge price, revenue, or production risk by entering into at least one standard exchange-traded contract for a future or option on a principal agricultural commodity (crops or livestock) produced on the farm. 3. Hedge price, revenue, or production risk on at least 10% of the value of a principal agricultural commodity produced on the farm by purchasing an agricultural trade option. 4. Cover at least 20% of the value of a principal agricultural commodity (crops or livestock) produced on the farm with a cash forward or other type of marketing contract. 5. Attend an agricultural marketing or risk management class. This includes, but is not limited to, a seminar or class conducted by a broker licensed by a futures exchange. 6. Deposit at least 25% of the risk management payment into a FARRM account, or a similar tax deductible account. 7. Reduce farm financial risk by reducing debt in an amount that reduces leverage, or by increasing liquidity. 8. Reduce farm business risk by diversifying the farm's production by producing at least one new commodity on the farm, or by significantly increasing the diversity of enterprises on the farm. A producer's annual risk management payment will be based on his or her Federal Crop Insurance Corporation (FCIC) average actual production history (APH) established for the 2000 crop for each Federally insurable agricultural commodity grown by the producer. Under existing FCIC procedures, the average APH for a commodity for crop year 2000 is based on a producer's documented production and acreage history from at least 4 of the 10 immediately preceding crop years. Let me give a hypothetical example of how this would work at the farm level. Suppose a farmer produces corn, soybeans, and apples for the fresh apple market on a total of 525 acres somewhere, let's say, in the eastern half of the country. Corn and soybeans are federally insurable throughout the country and apples are federally insurable in most areas that have significant apple production. Let's further suppose that this hypothetical producer has never purchased federal crop insurance before. Under my bill, this grain and apple farmer would be eligible for risk management payments for each of the 2001 through 2004 crops based on his average actual production history for corn, soybeans, and apples for the four crop years covering 1996, 1997, 1998, and 1999. He could document more than four years of production history, but FCIC procedures require a minimum of four consecutive years. Let's suppose the producer's average production is 30,000 bushels of corn based on 250 acres; 10,000 bushels of soybeans based on 250 acres; and 11,548 bushels of apples based on 25 acres. The producer's average APH would be valued at the 1997-1999 average FCIC established price level for each crop. This price is $2.38 per bushel for corn and $5.80 per bushel for soybeans. The apple price varies by region. For this example, I will use a fresh apple price of $4.17 per bushel (42 pounds/bushel) which would be the applicable price for fresh apples in one of the eastern region's major apple-producing states. At these prices, the value of the producer's average APH across all crops (rounded to the nearest dollar) would be $177,554. The amount of the producer's annual risk management payment would be based on a percentage payment rate determined by the Secretary of Agriculture based on $1.275 billion for each of the 2001 through 2004 crops for a cumulative total of $5.1 billion. Preliminary estimates suggest that the payment rate will be somewhere between 1 percent and 2 percent of production value if 100 percent of the eligible farmers sign up for risk management payments. Thus, a reasonable estimate is that the percentage payment rate will come out at 1.5 percent of production value. If this estimate turns out to be correct, our hypothetical grain and apple farmer's annual risk management payment (rounded to the nearest dollar) would be $2,663. The 2001 payment would be available to the farmer on or after October 1, 2000, approximately one year from today. In order to qualify for his risk management payment each year, the farmer would have to certify with the Agriculture Department that he had obtained or used 2 of the 8 risk management practices each year. He could do this in a large number of ways. For example, he could qualify by purchasing crop multi-peril crop insurance on his 2001 corn or soybean production and cash forward contract at least 20 percent of the 2001 corn or soybean crop. Alternatively, he could qualify by entering into a marketing contract with a buyer for at least 20 percent of his 2001 apple production and purchase exchange-traded options to hedge price risk on his 2001 corn or soybean crop. Mr. President, I ask unanimous consent that a section-by-section summary of my bill be printed in the Record. I encourage my colleagues to study my bill and to talk it over with farmers in their own states.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce legislation to help our nation's farmers cope with the risks inherent in production agriculture. My colleagues are familiar with the challenges facing American farmers. Prices are down world-wide. Exports are lower than expected, in large part due to the economic problems in Asia. Weather problems, from droughts to floods, have plagued large portions of our country. The Senate has passed, and a conference committee is considering, an agricultural appropriations bill that contains emergency provisions to deal with these immediate needs. For the intermediate and long term, the Congressional budget resolution contains $6 billion for use in fiscal years 2001-2004 that can be used as direct payments or to help farmers manage risk. Given these available funds, the question for policymakers is how best to help farmers manage the risks that they face. Some suggest that the entire $6 billion should be used to alter the subsidy structure of the federal crop insurance program. I believe that risk management is broader than crop insurance alone. To keep U.S. agriculture competitive, farmers will have to consider a variety of practices including: engaging in sophisticated marketing practices; reducing debt; considering alternative crops; and purchasing crop insurance. An approach to risk management that focuses on the crop insurance program's subsidy structure is too narrow to address the many risks faced by farmers. In crafting my own risk management bill, I was guided by four principles. First, the greatest possible amount of the $6 billion should go directly to farmers. In the crop insurance program, private insurers receive substantial compensation for selling and servicing multi-peril policies on the government's behalf. Overall, the insurance companies receive about one-third of the federal financial support of the program. Farmers get the remaining two-thirds. In my view, farmers should receive more of the new federal spending. Second, the $6 billion should be provided in such a manner so that it does not distort planting decisions. Leading economists believe that crop insurance encourages the planting of crops on marginal and environmentally challenged acreage. Federal risk management spending should not inadvertently subsidize overproduction when world-wide agricultural stocks are already large. Subsidizing overproduction postpones the day when agricultural prices will rebound. Third, the $6 billion should be distributed equitably among farmers and among regions. In terms of eligible 1998 acres insured, farmers' participation by state ranges from a low of 4 percent to a high of 93 percent. Clearly, farmers in some parts of the country do not view crop insurance as a useful risk management tool. By spending the bulk of the increased federal assistance on crop insurance, we are denying farmers in some parts of the country risk management help. Fourth, farmers should be encouraged to pursue a variety of risk management strategies, including, but not limited to, crop insurance. Within broad parameters, farmers should be able to choose the risk management strategy that best meets their needs. Mr. President, the bill I am introducing today complies with my four principles. First, of the $6 billion in available new spending, over $5 billion is sent directly to farmers. Second, because the money is sent directly to farmers and is based on historical production, it is far less likely to distort planting decisions. Third, because it is not limited only to one form of risk management--crop insurance, it is more equitable among regions. Fourth, in order to better meet farmers' individual needs, it lets farmers choose risk management strategies from a menu of options. The bill directs the Secretary of Agriculture, for the 2001-2004 crops, to offer to enter into a contract with a producer in which the producer receives a risk management payment if the producer performs at least 2 of the following risk management practices each applicable year: 1. Purchase Federal or private crop insurance (e.g., private crop hail) that is equivalent to at least catastrophic risk protection, for at least one principal agricultural commodity produced on the farm for which federal crop insurance is available. 2. Hedge price, revenue, or production risk by entering into at least one standard exchange-traded contract for a future or option on a principal agricultural commodity (crops or livestock) produced on the farm. 3. Hedge price, revenue, or production risk on at least 10% of the value of a principal agricultural commodity produced on the farm by purchasing an agricultural trade option. 4. Cover at least 20% of the value of a principal agricultural commodity (crops or livestock) produced on the farm with a cash forward or other type of marketing contract. 5. Attend an agricultural marketing or risk management class. This includes, but is not limited to, a seminar or class conducted by a broker licensed by a futures exchange. 6. Deposit at least 25% of the risk management payment into a FARRM account, or a similar tax deductible account. 7. Reduce farm financial risk by reducing debt in an amount that reduces leverage, or by increasing liquidity. 8. Reduce farm business risk by diversifying the farm's production by producing at least one new commodity on the farm, or by significantly increasing the diversity of enterprises on the farm. A producer's annual risk management payment will be based on his or her Federal Crop Insurance Corporation (FCIC) average actual production history (APH) established for the 2000 crop for each Federally insurable agricultural commodity grown by the producer. Under existing FCIC procedures, the average APH for a commodity for crop year 2000 is based on a producer's documented production and acreage history from at least 4 of the 10 immediately preceding crop years. Let me give a hypothetical example of how this would work at the farm level. Suppose a farmer produces corn, soybeans, and apples for the fresh apple market on a total of 525 acres somewhere, let's say, in the eastern half of the country. Corn and soybeans are federally insurable throughout the country and apples are federally insurable in most areas that have significant apple production. Let's further suppose that this hypothetical producer has never purchased federal crop insurance before. Under my bill, this grain and apple farmer would be eligible for risk management payments for each of the 2001 through 2004 crops based on his average actual production history for corn, soybeans, and apples for the four crop years covering 1996, 1997, 1998, and 1999. He could document more than four years of production history, but FCIC procedures require a minimum of four consecutive years. Let's suppose the producer's average production is 30,000 bushels of corn based on 250 acres; 10,000 bushels of soybeans based on 250 acres; and 11,548 bushels of apples based on 25 acres. The producer's average APH would be valued at the 1997-1999 average FCIC established price level for each crop. This price is $2.38 per bushel for corn and $5.80 per bushel for soybeans. The apple price varies by region. For this example, I will use a fresh apple price of $4.17 per bushel (42 pounds/bushel) which would be the applicable price for fresh apples in one of the eastern region's major apple-producing states. At these prices, the value of the producer's average APH across all crops (rounded to the nearest dollar) would be $177,554. The amount of the producer's annual risk management payment would be based on a percentage payment rate determined by the Secretary of Agriculture based on $1.275 billion for each of the 2001 through 2004 crops for a cumulative total of $5.1 billion. Preliminary estimates suggest that the payment rate will be somewhere between 1 percent and 2 percent of production value if 100 percent of the eligible farmers sign up for risk management payments. Thus, a reasonable estimate is that the percentage payment rate will come out at 1.5 percent of production value. If this estimate turns out to be correct, our hypothetical grain and apple farmer's annual risk management payment (rounded to the nearest dollar) would be $2,663. The 2001 payment would be available to the farmer on or after October 1, 2000, approximately one year from today. In order to qualify for his risk management payment each year, the farmer would have to certify with the Agriculture Department that he had obtained or used 2 of the 8 risk management practices each year. He could do this in a large number of ways. For example, he could qualify by purchasing crop multi-peril crop insurance on his 2001 corn or soybean production and cash forward contract at least 20 percent of the 2001 corn or soybean crop. Alternatively, he could qualify by entering into a marketing contract with a buyer for at least 20 percent of his 2001 apple production and purchase exchange-traded options to hedge price risk on his 2001 corn or soybean crop. Mr. President, I ask unanimous consent that a section-by-section summary of my bill be printed in the Record. I encourage my colleagues to study my bill and to talk it over with farmers in their own states.

Mr. LUGAR

Mr. LUGAR. Mr. President, Friday, September 17th was National POW/MIA Recognition Day. On this day, we remember, give tribute to, and stand in solidarity with the loved ones and families of the thousands of Soldiers, Sailors, Marines and Airmen who became Prisoners of War and Missing in Action. These Americans swore an oath to support and defend the Constitution and carried that promise through to great sacrifice for their nation. While thousands died, many others endured years in starved, tortured, isolated misery before regaining their freedom. Their perseverance, integrity and heroism are shining examples of the core values on which this nation was founded and became great. As a former Navy officer, I feel strongly that the United States Government must fulfill its commitments to the men and women who serve in the Armed Forces. One of these commitments is ensuring the return of POWs and MIAs at the end of hostilities. The vigorous pursuit of this commitment must continue through on-site investigations being undertaken in Indochina and through a fuller examination of records in the United States, Russia, and Southeast Asia. Through much diligence and hard work, and gradually improving relations with various nations since 1973, 529 American servicemen, formerly listed as unaccounted-for, have been recovered, identified and returned to their families. However, 2054 Americans remain unaccounted- for from the war in Southeast Asia, with 1,530 in Vietnam. We have focused, and rightly so, many of our efforts on Southeast Asia, but we must also honor those who were held prisoner and who are missing in action in other remote parts of the globe. More than 80,000 Americans remain missing and unaccounted for from World War I, World War II and the Korean conflict, and countless others from the Cold War. Since the end of the Cold War, I have visited Russia and other states of the former Soviet Union on several occasions. During meetings with high level Russian government personnel and members of the Russian military. I have made it clear that Russian cooperation in these areas is a necessity. I am hopeful that American efforts will lead to information and/or evidence of the fates of U.S. servicemen still missing from conflicts during the Cold War. I likewise encourage my colleagues who interact with officials of Laos, Cambodia, Korea, Vietnam and others to press for the same commitment from those officials. Headway is being made, but there is still a long way to go before we have the fullest possible accounting of all POW/MIA personnel. Our great and free Nation owes eternal gratitude to all POW/MIAs and their families for their supreme sacrifice, but we in the Senate shall not rest until all are accounted for. I urge you the administration, the Departments of Defense and State, the Joint Chiefs of Staff and the National Security Agency to redouble our efforts.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on September 23, 1999 in SH-216 at 9:00 a.m. The purpose of this meeting will be to (1) To examine the impact of electronic trading on regulation and (2) to consider the nominations of Paul Riddick to be Assistant Secretary of Agriculture for Administration and Andrew Fish to be Assistant Secretary of Agriculture for Congressional Relations. committee on indian affairs

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce the Access to Children's Health Insurance Program Act. Joining me in this effort is my colleague from Indiana in the other body, Representative Julia Carson. Congress created the S-CHIP program in the Balanced Budget Act of 1997 as a new federal-state partnership to expand health insurance coverage for low-income children not eligible for Medicaid. Under S- CHIP states may cover children in families up to 200 percent of the federal poverty level or, in states with Medicaid income levels for children already at or above 200 percent of poverty, within 50 percent over the state's current Medicaid income eligibility limit. Congress provided over $4 billion annually to match state expenditures for this program. Implementation of the S-CHIP program has been slow. States have faced both normal start-up problems as well as other obstacles to identifying and enrolling eligible children. There are an estimated 11 million children who are uninsured with 7.5 million who could be eligible for the S-CHIP program. Congress envisioned that 5 million children would receive services under S-CHIP. As of July 1999, according to the Kaiser Family Foundation, only 1.3 million children were enrolled on S-CHIP, less than half the projected enrollment in 1999. The federal child nutrition programs of school lunch, child care feeding and WIC are important sources of information on potentially eligible children as well as a contact point with their parents. Typically these programs collect income information that can be used to identify eligible children, and even enroll children into federal health insurance programs. However there are limits on the disclosure of school lunch data. While state and local health programs and other means-tested nutrition programs may receive this data, Medicaid and S- CHIP may not. Our bill will expand disclosure, subject to privacy provisions, to the state health agency running Medicaid and S-CHIP. As an added protection, both the State and local education authority must agree to this new disclosure. The bill will also expand on a demonstration basis the use of WIC administrative funds. With the new authority, WIC clinics will be able to take a more active role in the identification and enrollment of children onto the S-CHIP and Medicaid programs. However, since funding for WIC is discretionary and funds for required program activities are tight, the number of sites will be limited. The General Accounting Office will be required to determine the added cost of the program. Finally the bill will fund demonstration grants to states. The demonstration projects will integrate nutrition program grantees (schools, child care centers and WIC clinics) and other social service programs with the federal health care programs for low income children. States will form comprehensive informational and enrollment projects to be eligible for the funding. Mr. President, this bill removes bureaucratic barriers so that more poor children may receive the health care they need. It does this by allowing one government entity to share information it possesses with another government entity responsible for health care. I urge my colleagues to support this bill. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce the Access to Children's Health Insurance Program Act. Joining me in this effort is my colleague from Indiana in the other body, Representative Julia Carson. Congress created the S-CHIP program in the Balanced Budget Act of 1997 as a new federal-state partnership to expand health insurance coverage for low-income children not eligible for Medicaid. Under S- CHIP states may cover children in families up to 200 percent of the federal poverty level or, in states with Medicaid income levels for children already at or above 200 percent of poverty, within 50 percent over the state's current Medicaid income eligibility limit. Congress provided over $4 billion annually to match state expenditures for this program. Implementation of the S-CHIP program has been slow. States have faced both normal start-up problems as well as other obstacles to identifying and enrolling eligible children. There are an estimated 11 million children who are uninsured with 7.5 million who could be eligible for the S-CHIP program. Congress envisioned that 5 million children would receive services under S-CHIP. As of July 1999, according to the Kaiser Family Foundation, only 1.3 million children were enrolled on S-CHIP, less than half the projected enrollment in 1999. The federal child nutrition programs of school lunch, child care feeding and WIC are important sources of information on potentially eligible children as well as a contact point with their parents. Typically these programs collect income information that can be used to identify eligible children, and even enroll children into federal health insurance programs. However there are limits on the disclosure of school lunch data. While state and local health programs and other means-tested nutrition programs may receive this data, Medicaid and S- CHIP may not. Our bill will expand disclosure, subject to privacy provisions, to the state health agency running Medicaid and S-CHIP. As an added protection, both the State and local education authority must agree to this new disclosure. The bill will also expand on a demonstration basis the use of WIC administrative funds. With the new authority, WIC clinics will be able to take a more active role in the identification and enrollment of children onto the S-CHIP and Medicaid programs. However, since funding for WIC is discretionary and funds for required program activities are tight, the number of sites will be limited. The General Accounting Office will be required to determine the added cost of the program. Finally the bill will fund demonstration grants to states. The demonstration projects will integrate nutrition program grantees (schools, child care centers and WIC clinics) and other social service programs with the federal health care programs for low income children. States will form comprehensive informational and enrollment projects to be eligible for the funding. Mr. President, this bill removes bureaucratic barriers so that more poor children may receive the health care they need. It does this by allowing one government entity to share information it possesses with another government entity responsible for health care. I urge my colleagues to support this bill. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, for the information of all Senators, the Senate will convene at 9:30 a.m. and be in a period of morning business until 10:30. Following morning business, the Senate will resume consideration of the pending disaster relief amendment to the Agriculture appropriations bill. It is hoped that a time agreement can be made so that votes on this issue can take place by tomorrow afternoon. As a reminder, the Senate will recess tomorrow from 12:30 to 2:15 so that the weekly policy conferences can meet. Further, a cloture motion on the dairy compact amendment was filed today. Therefore, under the provisions of rule XXII, that cloture vote will take place 1 hour after the Senate convenes on Wednesday unless an agreement is made by the two leaders.

Mr. LUGAR

Mr. LUGAR. Mr. President, I ask the Chair lay before the Senate a message from the House of Representatives on the bill (S. 880) to amend the Clean Air Act to remove flammable fuels from the list of substances with respect to which reporting and other activities are required under the risk management plan program. The PRESIDING OFFICER laid before the Senate the following message from the House of Representatives: Resolved, That the bill from the Senate (S. 880) entitled ``An Act to amend the Clean Air Act to remove flammable fuels from the list of substances with respect to which reporting and other activities are required under the risk management plan program'', do pass with the following amendments: Strike out all after the enacting clause and insert:

Mr. LUGAR. Mr. President, I ask unanimous consent that the Senate concur in the amendment of the House.

Mr. LUGAR

Mr. LUGAR. I thank the Senator.

Mr. LUGAR. Mr. President, I want to discuss the two amendments which have been offered by my colleagues, the distinguished ranking member, Senator Harkin of Iowa, and the distinguished chairman of the Agriculture Subcommittee on Appropriations, Senator Cochran. But I want to do so in the context in which Senators may be thoughtful about what type of action is appropriate, given not only the problems of agriculture but likewise the general problems that we have in this country that we are trying to address. I note, for example, that the President of the United States, in his speech to the Nation on agriculture on Saturday, indicated that there are a number of things at stake here. I quote the President: I am committed to working with Congress to provide the resources to help our farmers and ranchers by dealing with today's crisis and by fixing the farm bill for the future. But we must do so in a way that maintains the fiscal discipline that has created our prosperity that now makes it possible for us to save Social Security, strengthen and modernize Medicare with a prescription drug benefit and to pay off our national debt guaranteeing our long-term financial prosperity. These things are good for America's farming and ranching families, too, and they're good for all Americans. I quote the President because the administration has been asked a number of times for an opinion on what type of emergency spending, if any, is appropriate at this point, on August 2, for a harvest that, by and large, is not yet in and with conditions that must, of necessity, be unknown. The administration has been reticent to address this situation with any figure, in large part because the administration and, for that matter, many people in this Senate have been arguing over how the surplus we believe will come after September 30 should be spent or the surplus for future years. There have been a number of strong contending ideas which include the rescue of Medicare and Social Security reform, tax reduction, prescription drugs for those in Medicare who do not have that, and the various other things the President has cited. I make this point because usually on this floor we are into that kind of debate about our future and about how to use our resources. But from time to time, we have a debate on agriculture, and everything else is suspended. It is as if the money we are talking about today, the $10.8 billion, for example, that Senator Harkin addressed, does not pertain to any of the above--tax reduction, Medicare, Social Security, the surplus, and what have you. It is deemed emergency spending, outside the budget, outside the budget caps, outside of our general consideration. If we are to do emergency spending of that amount or any amount, there must be some requirements to show the criteria for what is required. That is what I want to review with the Senate this evening. I suggest the Department of Agriculture, in its most recent summary of where agriculture stands, points out that with low commodity prices in 1999, the year we are in, net farm income will be $43.8 billion. They point out that will fall below the revised estimate of $44.1 billion for 1998, last year. That means the estimate for this year is $300 million, or less than a 1 percent change, from the net income in 1998. I make that point because, as I have listened to the debate, Senators appear to be describing a loss that is substantially greater than that, but USDA in estimates made just last week, plugging in the low prices and plugging in also sometimes low inputs--that is, for feed costs and various other things agriculture people will need--have come to a conclusion the net change is only the difference between $44.1 billion and $43.8 billion. Beyond that, the average net income of the last 5 years has been $46.7 billion, which means this year's figure, if it comes out this way, is $2.9 billion less than the 5-year average. The average for the 8-year period covering 1990 through 1997 is $45.7 billion, so this year's result is 1.9 less than the 8-year average, or approximately 4 percent. I am not making a claim it is higher; I am saying it is going to be lower. It is going to be lower by $300 million as opposed to last year and at least $2 billion to $3 billion less than the 5-year and 8-year averages. As I have been listening to the debate and Senators have described this as a depression, a circumstance, Senators must take a look at the parameters of what is the actual set of facts. Let me point out historically the high water mark for agricultural income in the last 10 years was $54.9 billion in 1996. That followed the low year in 1995 of $37.2 billion. Low of 37, high of 54.9. Average: 45, 46 for the 5-year/ 10-year situations. This year: 43.8, close to 44 billion. That is the range. This is net income, not net loss. Agriculture had a substantial net income never below $37 billion and never higher than $54.9 billion in this 10-year period of time. We are taking a look at a situation that shows loss, but we ought to quantify that loss. These are the official USDA projections as of last week. Senators will recall that 1998's net farm income of $44 billion included $12.2 billion of direct Federal Government payments. About $9 billion was provided by the farm bill and the remaining $3 billion was made available by the October 1998 emergency appropriations bill. But this year, already, before this legislation comes to the floor, Federal payments are projected to be $16.6 billion. Let me point out how this can be true. The safety net provided by the current farm bill--that safety net--provides for an annual transition payment, a so-called AMTA payment, of $5.1 billion. That is provided for by the farm bill, and to be paid to all farmers according to formula at the times that are prescribed. But loan deficiency payments for corn, wheat, soybean, and other crops eligible for marketing loans are estimated at $6.6 billion. This is a safety net provided by the current farm bill. It has been suggested a number of times that the current farm bill, in its emphasis upon market economics, has no safety net. But I am pointing out $5.1 billion in AMTA payments and another $6.6 billion in so-called loan deficiency payments, still another $4.8 billion to be paid out in conservation and crop loss disaster payments, with $2 billion of that authorized by the 1998 October emergency appropriations bill. It is important to note that most of the farm debate has focused on low prices, and charts have been given to the Senate indicating how prices have tended downward over the years. But, nevertheless, the more important figure would be price times yield; that is, the income that comes from an acre. If, in fact, the price is low but the yield is high, the product of the two may still be a reasonable return for that acre in that year. There is an even more important fact that I suspect that many Senators have not thought through clearly. An article that I saw on the front page of USA Today talked about a farm meeting the distinguished occupant of the Chair attended in Illinois. That particular article mentioned low prices and pointed out the depression and the fall of those prices. But if the price of corn--as has been sometimes suggested--has been quoted at elevators at $1.75 or $1.70 per bushel, the good news is that a farmer will receive, at least if he is a farmer in the central part of Indiana, $1.95. That is price guaranteed through the loan deficiency payment in that part of the state. How does this work? Let's say the farmer brings the corn in and the market price is $1.70 per bushel at the time of harvest. At the Beach Grove elevator in Indianapolis, that farmer will receive what amounts to 25 cents a bushel more, bringing that $1.70 up to $1.95. The same is true for soybeans at Beach Grove, IN. The soybean loan rate will be $5.40. In some parts of the country it may be $5.26, I am advised, but it is not $4 or $4.50 or $4.60 or $3.75 or various figures that have been quoted. This is a tough concept to try to get across because even after you make the point again and again, people talk about a $3.75 market price for soybeans. What I am saying is that every bushel of soybeans the farmer brings into the elevator, he is going to get $5.26 to $5.40 because the government's loan deficiency payment will provide him with a payment equal to the difference between his market price and the local county loan rate. That is very different. This is not a question about how low the prices are going to go. If they go lower, the loan deficiency payment is higher. That is why the Federal Government will be paying out at least $6.6 billion to make up the difference. It was the same for wheat. In many parts of the country, the wheat harvest has already come in. But the government guarantees at least $2.58 for wheat at many elevators around the country. I make that point because that is the safety net of the current farm bill. It is a pretty strong safety net. It will provide a very substantial amount of income as the harvests occur, as the grain comes in, as the loan rates are established. It will amount to $6.6 billion that has not yet been received but will be received by farmers. Hopefully, that will take the debate away from a comparison of how low the prices are going to go to the concrete figure of what the loan deficiency payment will be--specifically, as I say, again, in most parts of the country, at least $1.89 for every bushel of corn, $2.58 for every bushel of wheat, and $5.26 for every bushel of soybeans. At many elevators it will be a higher figure than that, including the one in Indianapolis that I cited. Farmers receive that even if the quoted market price is much lower. Let me mention some other statistics the USDA has pointed out that may give you some idea about the parameters of our discussion. In the same report last week of USDA giving estimates on net income, USDA also went into the question of farm assets and farm debt and farm equity. If you had heard the entirety of the debate today--or maybe for some time--on this issue, the Chair might logically believe that land values in this country are going down if they pertain to agriculture; that the net worth of farmers collectively in this country is going way down. That, in fact, is not the case. The Agriculture Department points out that farm equity, which was $825 billion in 1996, rose to $857 billion in 1997. It is estimated to go up to $865 billion this year. That is an increase of approximately $9 billion more, or a 1-percent increase in net worth. The farm real estate figures are $802 billion for this year as opposed to $794 billion last year, and $783 billion the year before, and $746 billion the year before that. It does not mean every acre of land in every county all over America is going up. As a matter of fact, the Federal Reserve Board statistics for my home State of Indiana indicate an estimate that in the first quarter of 1999, real estate values in agriculture may have gone down by 2 percent. As a matter of fact, that was true of a number of States. But in a fair number of States, obviously, the estimate is that agricultural land is going up. The aggregate, the total, for America is the land values are higher. Furthermore, the net worth is higher because farm debt will decrease from $172 billion to $171 billion. Once again, listening to the debate you would say, how can that be? If we are in a depression circumstance, how can you be arguing that real estate on farms is going up, that net worth is going up, that debt is coming down? Because that is what is occurring. You can give any number of statistics about prices falling, but the fact is that net income is going to fall by $300 million. And that will still be within $2 to $3 billion of a range for the last 5 or 10 years of time. Let me try to bring clarity to the argument in still another way. The distinguished Senator from Iowa, Mr. Harkin, has mentioned, in a fact sheet that he released and he gave some of these figures again today, that there will be a 29-percent drop in agricultural income, but Senator Harkin correctly says this is a drop in principal field crops, not all of agriculture, but principal field crops. I have noted that situation on my own farm. The distinguished Senator from Iowa, Mr. Grassley, is on the floor. He has a family farm and could cite statistics from his farm if he were inclined to do so. On my farm, Lugar farm in Marion County, IN, our net income in 1998 was 18 percent less than in 1997. That was true principally because our major income sources were soybeans and corn. My guess is that our net income in 1999 may have a similar reduction, although I hope not so great as the 18-percent that was suffered the earlier year. Obviously, it makes a very great deal of difference, when you come to the net income situation or the difficulty of a farmer, whether the farmer has debt. Our situation is one in which we do not have debt. We are able to finance our operating loans, our operating expenses, without loans and out of retained capital. So that gives you a big headstart. For those farmers who have extended themselves to buy the adjacent farm or have never quite paid off the family mortgage and who must borrow each year to put a crop in the field, the interest costs are very substantial. Those are reflected still in the overall aggregate statistics of net farm income in this country. As you take a look at ag statistics, the fourth that do the best as opposed to the fourth that do not do as well, very frequently the same amount of land is involved, same weather was involved. The question of debt intrudes and makes a big difference in the bottom line figure; likewise, the sophistication of the marketing plan. Even in the midst of the crisis we were talking about last week, I was able to make a sale of 1,000 bushels of corn to an elevator in Indianapolis at a figure higher than the loan rate, the government's guaranteed minimum price. That prospect was available to each farmer in America, I suspect, that day. We sold that corn for $1.97 for fall delivery. That is not a high price, but that is corn that will not be receiving a loan deficiency payment, corn sold in a market which is still out there. In weather-driven spurts, farmers have been able to market corn and soybeans even under these dire circumstances. I make that point because those who made sales forward contracts last February and March were able to sell their corn and their soybeans at prices that were substantially higher. Many farmers do these sales; some farmers do not. We are attempting to deal with a situation of a total aggregate, those that did very well and those that did not do so well. Finally, it seems to me it comes to a basic decision the Senate must make. That is, should the Senate say that agriculture, farmers in America, ought to be made whole, at least to the extent their income is raised to, say, the average level of the last 5 years or the average level of the last 10 years? Is it the goal of the Senate to say no, that is not good enough? What we ought to do is make certain that 1999 is one of the best years agriculture has ever had. The proposals before us today will not boost the $44 billion more or less of net farm income to $54.9, although they come very close. If the Democratic amendment was adopted and, literally, you added $10.8 billion to the estimate of 43.8, you come up to 54.6, which is just 300 million short of the all-time record for net farm income. In short, not a rescue operation but an idea, I suspect, that this is a good time to, if not set a new record, at least come very close to that through additional Government payments. That may not be the intent of the Senate. My guess is most Senators understand that farm income is down and they would like to make farmers whole, at somewhere around an average level, which would appear to mean a payment of $2 or $3 billion. Neither of the proposals before us is of that nature. I have pointed out in colloquies with the press during the past week that there is before the Agriculture Committee now a risk management bill that would, in fact, provide about $2 billion a year for each of the next 3 years if passed, and that would pretty well fill the gap, if that was the intent of the Senate to do that. I conclude that Senators finally will take a look at this entire situation and reach some overall judgments. Let me offer at least some reasons why some payments might be justified. First of all, farmers or the rest of America could not have anticipated the Asian crisis that hit about 2 years ago. The last year, in 1998, probably took away 40 percent of the demand of Asian countries for American agricultural products. That probably took away 10 percent of our entire market last year, which means that demand fell overnight by 10 percent, whereas supplies for the last 3 years have not only been ample but around the world the weather has been mighty good and the amount of supply abundant, really throughout that period of time. So a 40-percent hit in terms of the Asian export demand hit very hard. It hit suddenly. Within a 90-day period of time we realized that difficulty. Let me also mention, in addition to the Asian situation and the oversupply situation, the abnormally good weather in China, in Europe, in Brazil, in Argentina, Australia, major sources of food throughout the world, that the American farmers have run up against the problem of genetically modified organisms in European debate, which means that Europeans are rejecting corn and soybeans that come with the roundup ready genetic changes. As we all know in America agriculture, in order to get rid of the weeds in the field, it is a much simpler process. It strengthens, certainly, the soybean and corn plants, if a gene is changed in the corn or soybean plants that rejects the herbicides that kills all the weeds but leaves the corn and the soybeans standing. We believe that not only is corn and soybeans from such situations safe, but as a matter of fact, our yields have increased. The health of the plants has increased, and we felt all over the world people might want to benefit from these breakthroughs. Not so in Europe, and a debate rages as to whether there is something fundamentally wrong with our genetically modified seeds to the point we are finding it very difficult to export a single bushel of corn or beans to the European market. That debate is going to go on for awhile, and it has not been helpful. We are on the threshold of a World Trade Organization meeting in Seattle that comes up in October. We must have fast track authority. That is, the President must be able to negotiate on behalf of the administration with other countries, knowing this body will vote up or down on the treaty without amendment, because amendments by all of us attempting to influence the situation to benefit our particular States or crops or so forth could be matched by amendments all over the world and the treaty negotiations collapse. We don't have fast track authority. We have tried in this body several times to obtain that. The House of Representatives had similar difficulties. It will require enormous leadership by the President and by many of us, but we cannot make a new treaty that knocks down trade barriers, that increases our exports in the way that all Senators want, without doing the basic steps. Fast track authority is one of them, as well as a determined will that agriculture will not be left off the wagon, that agriculture is an integral part of what our Nation must do at the WTO meetings. I make this point because we talk, often glibly, about the need for exports. Of course, we have a need for exports. But they will not happen in the quantities that we need to have happen without lowering tariff and nontariff barriers, and the Seattle meeting is where that does or does not get done. If we don't have fast-track authority, it will not occur during this administration. That is a long time. So for all these reasons, farmers have taken a direct hit, largely because of worldwide demand and in the case of many fields in the State of Illinois, or in my State of Indiana, or the State of Iowa, as much as a third to a half of all our acreage literally results in yields that must be exported, or we have it coming up around our ears. We know that and yet, as a Nation, we have not moved aggressively to make the difference that has to occur. So for all these reasons, the Senate might come to a conclusion that some compensation is required for farmers in order to keep their cash flow going. I made the point earlier that, as a matter of fact, loans will be reduced this year. But cash flow will be reduced, also. And for those farmers who have the need for operating loans, who are genuinely in danger because of debt situations, the situation could be dire and family farms could be lost. In the event that we are to make payments, the so-called AMTA payments, put money into the hands of farmers quickly, directly, and certainly--we had a pretty good demonstration of that last year. The Senate, in its wisdom, at the very end of the session as the large appropriation compromise came together, appropriated as part of a package about $6 billion for American agriculture. It came as a surprise to many, but the form of it came as a surprise that was even more difficult. About $3 billion of it came in AMTA payments. Those were made immediately. They were received by farmers in the first week of November, after passage late in October of the appropriation bill. I make that point because if we are serious about money actually arriving in the hands of farmers, then we must be serious about the distribution method. The AMTA method gets the money to farmers. It does increase cash flow. It is seen as equitable. The ratios were long ago worked out on the basis of crop history and the signatures for the farm bill. The other half of the $6 billion was for so-called disaster payments. They were ill-defined then, as they are ill-defined now in the legislation in front of us. The USDA struggled and, as a matter of fact, finally made payments in June of this year--not in November or October of last year--and it did so after exploring not only disasters of 1998 in some States, but '97, '96, '95 and '94--multiple years, all mopped up with some type of distribution and equity found among all sorts of contending parties in various States and counties. Mr. President, money is not going to get to farmers very fast in distribution methods that suggest that type of procedure, however humane the motivation may be. As a matter of fact, payments aren't going to go to any farmer very soon from this legislation because the House of Representatives is not prepared to act upon this. So, therefore, whatever we are doing with urgency now is going to be a matter for September, or if the appropriation bills do not pass for October or November, or whenever a grand compromise occurs. I make that point because farmers listening to this debate might feel there is some possibility as of tomorrow or the next day a vote by the Senate could lead to money coming to them. But it will not come to them very soon, whatever our result may be on the floor. Therefore, last week, I suggested that we have 3 days of hearings before the Senate Agriculture Committee, in which on the first day the Secretary of Agriculture would come before the committee and, hopefully, respond to our questions as to what the administration's recommendations are, given all that the President and the Secretary have said about the overall budget condition, about taxes, about Medicare, about Social Security, and given the administration's view of what is appropriate farm or agricultural legislation. And if you follow this with other groups in our society who would respond to Senator's questions about this, the committee will hold a markup in the first week of September so that the Appropriations Committee that must now struggle with this legislation would have a fairly clear roadmap of what the compromises were and what considerations have been given. Furthermore, the September debate would give us a pretty good idea of what the yields actually are going to be for a number of our major crops. I suspect that, even as we speak, as people now begin to talk about a different problem in agriculture--namely, drought--a whole slew of new considerations are going to come into the picture. The price might go up and the yield might go down. Once again, the product of the two is the critical element, rather than the new per acre. Mr. President, obviously, we are in this debate because the occupant of the chair and, more particularly, the distinguished floor leader has indicated that we need to get on with this. I accept that fact. We will have tomorrow morning in the Agriculture Committee at 9 o'clock an appearance by the Secretary of Agriculture. We will ask him for his testimony and we will ask him for the administration's point of view, which I think is relevant to what we are discussing here. I know it is relevant on the basis of last year's experience because we passed an agriculture appropriation bill, and it had considerable benefits for farmers. But it was vetoed by the President. And, as a result, the benefits did not accrue very rapidly, and we got into what I would say was a bidding war again. That is not advisable if it can be avoided in some normal framework. So I am hopeful that we will have a hearing, and at least that it will provide some benefit for the debate we are now having before us, and certainly for the debate we shall have again. We will have it again because the Appropriations Committees will have to come back with conference reports, and we will have to judge the adequacy or inadequacy of what we have done at that point. Mr. President, I finally make the point that the previous speakers have stated there is an emergency to be met, an immediate need for income. But, fundamentally, we must debate the entire farm bill when we come back--not simply a question of adequate income for farmers, but the fundamental law of the land. I am prepared for that debate, but I simply say that before Senators get engaged in the debate, it is well to gauge at least the benefits that come from the current farm bill. There are, to date, $16.6 billion this year, which is just $100 million short of an all-time record of farm payments. That is a substantial safety net. I make the point that the farm bill recognizes that point and, in fact, provides fairly amply when that occurs. But it also provides freedom to farm, and that is very important to most farmers in this country--the ability to determine how to manage their land, how many acres of corn, or beans, or cotton, or rice, or whatever the farmer wants to plant, or not to plant at all. The AMTA payment comes to a farmer who does not plant at all, because this is a transition from the date of supply control to a day in which we move into market economics and the farm area more completely. The thing the world dictates presently is that market economics is the important way to go. Our country testifies to that in almost every other debate. I hope we will continue to testify in behalf of that when it comes to American agriculture. I thank the Chair for this indulgence; likewise for other Senators. I am hopeful that before action is taken on either of the two amendments, there will be testimony by the Secretary and then very thorough analysis by each Senator as to what our obligations should be to American agriculture both to encourage and enhance it and, likewise, that our obligation is to all the taxpayers of the country and the other major objectives that lie before our country. I thank the Chair.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on August 3, 1999, in SH-216 at 9 a.m. The purpose of this meeting will be to discuss the farm crisis. committee on agriculture, nutrition, and forestry

Mr. LUGAR

Mr. LUGAR. Mr. President, I ask unanimous consent that Senate Resolution 169 be discharged from the Armed Services Committee and, further, that the Senate proceed to its immediate consideration.

Mr. LUGAR. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to S. Res. 169 be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I ask unanimous consent that when the Senate completes its business today, it adjourn until the hour of 9:30 a.m. on Tuesday, August 3. I further ask unanimous consent that on Tuesday, immediately following the prayer, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, and the Senate then begin a period of morning business until 10:30 a.m. with Senators speaking for up to 5 minutes each, with the following exceptions: Senator Hagel, or his designee, from 9:30 to 10 a.m., to be followed by Senator Reed of Rhode Island for 10 minutes, Senator Baucus for 10 minutes, and Senator Durbin for 10 minutes.