The Senate passed a farm bill Friday afternoon. Thursday, Sen. Chuck Grassley explained how subsidy payments were leading to higher land prices and bigger farms. See his full remarks below.

"> Senate Passes Farm Bill; Reform Amendment Defeated - Daily Yonder

Senate Passes Farm Bill; Reform Amendment Defeated

riceThe Senate passed a farm bill Friday afternoon. Thursday, Sen. Chuck Grassley explained how subsidy payments were leading to higher land prices and bigger farms. See his full remarks below.

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riceGrowers of rice (right) opposed limits on crop subsidies.
Photo: Edward Leger

The farm bill passed the U.S. Senate Friday afternoon with a solid vote of 79-14. The $286 billion bill differs from the House version, passed in July, and it could face a veto from the White House.

The Senate bill provides a $4.4 billion increase in funds to aid conservation, but it contains few real changes in crop subsidy practices. Both reform groups and the Bush administration criticized the bill.

"This legislation is fundamentally flawed,'' Acting Agriculture Secretary Chuck Conner said in a statement, citing tax provisions in the bill that raise revenues and lack subsidy limits. "Unless the House and Senate can come together and craft a measure that contains real reform, we are no closer to a good farm bill than we were before today's passage.'' (The administration also opposes the House's version of the farm bill.)

Environmental Defense said the Senate had "squandered a golden opportunity to reform U.S. farm policy, cut excessive subsidies, and strengthen vital programs to help farmers clean up the environment and improve public health."

"The president's advisers would recommend he not sign this bill," White House spokeswoman Dana Perino said in a statement. "We look forward to working with Congress to develop a fiscally responsible farm bill that includes real farm program reform while providing a strong safety net for farmers."

The Washington Post editorialized that for the Democratic Party, "ostensibly committed to fiscal discipline, majority rule and economic equality, this episode is a major embarrassment."

The real farm bill fireworks happened yesterday, however, when an effort to limit crop subsidies failed by just four votes. The measure was offered by Sen. Byron Dorgan, a North Dakota Democrat, and Chuck Grassley, the Iowa Republican. The Dorgan/Grassley amendment would have put a $250,000 per producer limit on farm program payments — a limitation that generated opposition from cotton and rice producers.

Even though the amendment gathered 56 votes, it failed in the Senate, where 60 votes are needed to avoid a fillibuster. Seventeen Republicans and 38 Democrats voted for the amendment, along with Bernard Sanders, I-Vt. Thirty-one Republicans and 11 Democrats opposed it, as did Joseph I. Lieberman, I-Conn. Sen. John McCain of Arizona was absent.

(Democratic presidential candidates Hillary Clinton, Chris Dodd, Joe Biden and Barack Obama voted for the Dorgan/Grassley amendment. Republican Sam Brownback also voted for this measure. The full rollcall can be found here.)

The Senate bill now must be reconciled with the House version

** GRASSLEY'S SPEECH **

GrassleySen. Chuck Grassley (right) checks out a pig with former Sen. Fred Thompson.

One of the effects of high subsidy payments has been increasing value of farmland. (See this Yonder story for background.) Rising land prices have led to a consolidation of farmland — and the exclusion of young farmers from getting into the business. One of the purposes of the Dorgan/Grassley amendment was to limit the incentive to consolidate farm land.

When Iowa Sen. Chuck Grassley rose to speak in favor of his amendment limiting subsidy payments, he talked about the consolidation of land in farm country and what this trend was doing to young farmers. His remarks are below:

Remarks of Sen. Chuck Grassley

Madam President, I think everybody in this body would agree we need to provide an adequate safety net for our family farmers, and I think I ought to be totally transparent with the taxpayers who might be listening, as well as my colleagues. I want you to know that I farm in a crop share–in Iowa, we call it a 50-50 arrangement–with my son. If we get farm payments, I get 50 percent of those payments. So I have received farm payments and presently do. That is assuming prices are low enough so you do receive those payments. Right now, they aren't that low.

We are talking about an adequate safety net. In recent years, however, assistance to farmers has come under increased scrutiny by urban communities and the press. The largest corporate farms are getting the majority of the benefits of the farm payment program, with 73 percent of the payments going to 10 percent of the farmers. With a situation such as that, we could lose urban support for the safety net for farmers.

Government payments were originally designed to benefit our small- and medium-sized farmers, but instead, now, as you can see, the vast majority of them are going to the smallest percentage of the farmers–the biggest farmers. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices. Increased land prices and cash rents are driving family farmers and young farmers from the business of farming. I have mentioned this before in other debates. Land in Iowa generally, but I will use as an example land near my farm in New Hartford, IA, has skyrocketed and is selling anywhere between $4,000 and $6,000 an acre. In my home county, the value of an acre is up 64 percent since 2000.

Anybody listening might say, well, why is that bad for farming? Well, family farmers don't buy land one day and sell it the next. You buy it for the long haul. Sometimes farms have been in what we call century farms, for well over 100 years. So this doesn't put income in farmers' pockets. It does give them value. And if they were to die, I suppose their heirs would get a lot of money.

Across the State of Iowa, the average land value per acre rose 72 percent in the last 6 years. All these figures I am citing have something to do with the inability of young people to get started farming. When the average age of farmers is 58 in my State, we ought to start thinking about what we can do to make sure that young people, the next generation of farmers, can get started.

My State isn't the only one where this is occurring, an increase in land values. In a report published by two agricultural economists at Kansas State University, land values have increased 64 percent since 2002. This trend is occurring in many other States as well. The average of typical cash rents per acre in Iowa rose 25 percent in the same period of time. Because if you can't buy land, and you want to farm, you rent land. How are family farmers and young farmers going to survive with prices like this? How can they even get started?

This brings to mind a conversation I had within the last week with a young farmer near my home. He knows who gets these big payments in the State of Iowa, and he said, so-and -so–and I am not going to give the names out–just bought 600 acres of land. Why don't you guys do something about subsidizing these big farmers to get bigger? Now, this same young farmer would say to me, any farmer can get bigger all they want to. That is their business. That is entrepreneurship. But should we be subsidizing the biggest farmers to get bigger? He says, if you want to do something to get young people started–this young farmer said to me–put a cap on what they are getting paid from the Federal Treasury. In other words, 10 percent of the biggest farmers getting 73 percent of the benefits out of the farm program is just plain bad policy.

I have been hearing directly from producers for years what former Secretary Johanns heard in his farm bill forums held across the 50 States. Young farmers can't carry on the tradition of farming because they are financially unable to do so because of high land values and cash rents. If that was the market, okay. But if it is being influenced by subsidies for big farmers to get bigger, they would say it is wrong. They would also say it is wrong when you have 1030 exchanges, when it is cash free, as having something to drive up the value of land as well.

Professor Terry Kastens, of Kansas State University, came out with a report on this subject. The report states that since the 1930s, government farm program payments have bolstered land values above what they otherwise would have been. Dr. Neil Harl, an Iowa State University emeritus professor, worked with Professor Kastens on this subject, and he determined that:

"The evidence is convincing that a significant portion of the subsidies are being bid into cash rents and capitalized into land values. If investors were to expect less Federal funding–or none at all–land values would likely decline, perhaps as much as 25 percent."

That would give young farmers better opportunities to buy or cash rent for less in order to get started farming. And that is necessary, because the average age of farmers in the Midwest is about 58 years.

The law creates a system that is clearly out of balance. If we look at the results posted here, it emphasizes what I have already said: Ten percent of the farmers get 73 percent of the benefits out of the farm program, and the top 1 percent gets 30 percent.

Senator Dorgan and I have offered this payment limits amendment which I believe will help revitalize the farm economy for young people across this country. This amendment will put a hard cap on farm payments at $250,000. For a lot of farmers in my State, they say: Grassley , that is ridiculously high. But we have to look at the whole country, so this is a compromise.

No less important, we tighten up the meaning of the term “actively engaged,'' a legal term in the farming business. What that means is that people have to be farming, because if we are providing a safety net to someone in farming, I think they should be required to actually be in the business of farming, sharing risks and putting their money into the operation….

By voting in favor of this amendment, we can allow young people to get into farming and lessen the dependence on Federal subsidies. This will help restore public respectability for the Federal farm program and keep urban support for the farm program so we can continue to have a stable supply of food for our consumers.

I call upon my colleagues to support this commonsense amendment, and I reserve the remainder of time for our side.

I yield the floor.

 

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