Radio Announcer: Forum Hall here in the K-State [Kansas State] Union. A report on that field hearing of the Committee on Agriculture, Nutrition and Forestry for the U.S. [United States] Senate. It's a fact-finding hearing for the U.S. Senate Agriculture Committee and Kansas Senator Robert Dole is leading it, and he's just come into Forum Hall, was picked up at the airport few minutes ago and driven in here. The place is filling up right now and they're going to hear testimony from farmers and farm groups and others. I see in the crowd here, Laverne Becker. He's from Russell. A farmer out there, Frank Boyd from southeast Kansas. Bob Laughlin, a cattlemen up by Olsburg. Albert Kintz from Wamego. All of these in the area. The Senator now seating himself at the main table and he will be at times faced by a panel as the plan goes here, but he may make some opening remarks. A statement from Senator Bob Dole, which will lead things off here. This is one of a series of six similar meetings that started Saturday with a luncheon at Liberal, and they had one Saturday afternoon at Goodland, this one today, and tomorrow there are a pair: one at Hutchinson, one at Winfield. And then on Tuesday night, one at Pittsburg. We'll switch now to the stage, and Kansas Senator Robert Dole. (unknown male speaker): Anyway, so– (unknown male speaker): Do you want to watch? (unknown male speaker): It's fine, no. Senator Bob Dole: Well, thank you very much. I'll not take a great deal of time as far as an opening statement is concerned, but I can say that we had about 3 hours in Goodland on Saturday and I've had an opportunity the past couple of days to talk with farmers in Wyoming and Colorado, so I can tell you that the unrest, or at least the concern extends beyond the boundaries of Kansas and extends throughout the Midwest and probably other areas also. I thought to describe what we hope to do in the time we have. Our committee will be having hearings starting February 22nd, the Senate Agriculture Committee. They will probably extend in about mid-March, 3 or 4 weeks of hearings, where they'll hear hundreds of witnesses on all the different programs and commodities and get into food stamps, Food for Peace, beekeeper indemnity. We'll cover the whole works, in other words, in that period. I've co-sponsored a bill with Senator Talmadge of Georgia. He's the chairman of our committee. I'm the ranking Republican on the committee. I say that to point out that there is a bipartisan effort to at least look at farm legislation, hopefully try to come up with something that would be- have some impact. In addition, to make certain everyone understands, you have to start with something. I'm not suggesting that bill is perfect. It probably should be changed. It probably will be changed in many areas, but to have hearings focused on a piece of legislation, you have to introduce it. So, we have the Talmadge-Dole bill, and also I've introduced a bill with Senator Bellmon who is a wheat producer from Oklahoma and we’ll have hearings on that at the same time. Now the primary, I guess the area of controversy, in the sense it gets into budget expense, will be on loan rates and target prices, cost of production, and these are the areas I hope that you can shed some light on today. Let me say too, there are 18 members on our Committee on Agriculture in the Senate. I assume on the first day of the hearings, maybe 8 or 9 will be in attendance, but by the second or third day, there probably be 2 or 3 senators present and the point I make there is that I think we can be constructive today and I hope that what we do will be helpful to the full committee. All the testimony taken will be part of the official record. It is read by the staff, and it is read by some of the Members who have particular interest in the Midwest. And so, I think the comments from the witnesses in Kansas will be most helpful. The only constraint we have is time. We will try to limit each witness to 5 minutes. Hopefully that will give us some time for questions that we can maybe build a record on that basis. And so, I'll ask that my statement be made part of the record to save the time of reading it. I think I've more or less outlined- (pause; pages turning) I might just stress one thing. It seems to me that we're going to get out of the doldrums as far as prices, they're going to have to pay particular attention to exports, and if you have any comments on how we can stimulate exports, that would be most helpful. Grain inspection, I can only say that I've introduced a bill to amend the Grain Inspection Act. I think it will be passed shortly after we return next week, at least passed by the committee. We feel and felt the time that the bill was passed it may have gone a bit too far, but there was need to tighten up grain inspection standards. There have been many indictments following the scandal in Louisiana. Many farmers were concerned that the products they delivered at the local elevator were being slugged and otherwise diluted and our commodities were suffering as far as foreign buyers were concerned because of the quality of the merchandise delivered. It wasn't always the quality they thought they had paid for. So, we believe that the new grain inspection bill, in the long run, offers protection for the Kansas and the American producer, but we share the view that perhaps that there was some legislative overkill. We plan to correct the problem with user fees. In addition, we will remove much of the record keeping requirements from small country elevators and then appoint a grain- an advisory committee to advise the administrator on certain areas. We’ll also be considering meat import quota legislation this year, and I assume there's some here who would have some comments on that. We would like to close off the imports through the free trade zones. We'd also like to revise the formula on import quotas to reduce imports at times when the volume of fed beef in this country decreases. Right now, it's the other way around and we think it ought to be just the reverse and that would permit more imports at a time and period of decline and fewer imports when we've got an abundance as we have now. There may or may not be any interest in this area in sugar beet legislation, but that's another matter that’s a concern generally in Kansas and in the Congress. Senator Curtis and Senator Hansen introduced sugar beet legislation just last week. The Sugar Act expired in 1974 and was not extended and now I think perhaps there's some need, at least some will see a need for legislation. Well, having said that, I thank everyone for attending. I have a list of witnesses, and I don't mean to preclude anyone if there's someone who is in the audience, or someone who would like to testify, If we have time, we'll be very happy to hear you. Otherwise, if someone in the audience has a prepared statement or a personal letter, we'll be happy to make that part of the record. The first witness on this list I have was State Senator John Crofoot, Chairman of the Senate Agriculture Committee in Topeka. John. Yeah. Announcer: Senator Crofoot now coming on stage and he'll be facing the Senator from Washington and to testify to this crowd of around 250.? Senator John Crofoot: I’m here today as Chairman of the Agriculture and Livestock Committee of the Kansas Senate. But really, speaking only as an individual, a non-official representative of that body. However, I would like to express my concern to the agricultural community of the state and my thoughts to you. I would like to start with what I believe is the fact of life, that I hope you can convey to the rest of Congress: it is impossible to have high wages and cheap food, and a healthy agricultural community all at the same time. For too long, food has been made to appear the villain. Whatever the cost-of-living index had discussed, it is made to appear that food is the reason that has gone up. Never is the raw product price mentioned, with the final price in relation to the other cost involved. Newspapers have gone from $0.05 to $0.25 with no comment from the press. Nickel coke is now $0.25 to $0.30. But let beef steak go up even 10% and the press and Congress have hysterics. Please carry the message back that the farmer and the livestock producer are entitled to a living wage. Our agriculture community has gone through several years of low prices, oversupply, drought and cost of production increases, which have resulted in disastrous losses. We have seriously eroded the capital structure of the former leader in agricultural production of Kansas. Increased loan guarantee will not solve the long-term problem. That would be like showing a linking inner tube to a man in the middle of the ocean. It will help for only a short time. Many of our young, and even the old, established farmers and livestock producers need long-term financing, similar to SBA [Small Business Administration] loans, possibly allowing the regional lender the opportunity to recover part of their regional loan prior to paying the emergency loan. Many of our small banks are being restricted because of commitments they have made to agricultural borrowers. That [they] depleted their liquidity to handle the Community's needs. Grain reserves will become a club to be held over producers head. Loan rates will become a ceiling as well as the floor. Attention is needed to preserving the soil and its fertility. It is cheaper in the long run not to grow than to waste in storage what we produce. Production and storage take precious energy which we are aware we're short of. Set aside, acres can conserve fertility and save energy, and the ends stabilize prices by reducing supply. Agriculture products are a balance of payments balancer. The government must stimulate the sale of farm products in foreign markets in order to buy the much needed oil to supply our economy with the energy it takes from manufacturing, heating homes, and transportation of our products. Surely we have learned that we cannot let a labor tyrant pressure our government into withholding farm products wanted by world markets just to hold down food prices or to provide a substitute for union transportation. Let us sell our farm products at FOBR [Free on Board] ports. Let the customer come and pick up the products. Depressions start at the farm level. The agriculture community is the largest consumer of manufactured products in our economy. Our investment in farm jobs runs in excess of $100,000 per job, most of which is produced by the people demanding cheap food. May God give you the wisdom and the courage to do that which is right, and to resist expediency or political pressure. But please give us long-term solutions, not peanuts for temporary relief. Thank you. (crowd applause) Bob Dole: Is it fair to assume, Senator Crofoot, that the existing program, maybe with some adjustments in the target areas and the target price areas and loan rates, has fairly wide acceptance among Kansas farmers? Senator John Crofoot: I think among the wheat growers it has, yes. But I think it's, as I say, it's an emergency measure. It's not the long-term solution. You know that we’ll make a lot of money at the people in the grain storing business, so we increase their production and pay a high loan rate.? Bob Dole: Well, some have suggested, there may be some witnesses later, that the loan rate should be $4.95 a bushel. I think it costs $3 billion to start with. So, I think there are realistic limits on what the committee can do. And others feel that the target price is set forth in the Talmadge Bill, which I've co-sponsored, which for wheat would be $2.91 per bushel, or not anywhere near the cost of production. So, I guess, as I said earlier, that's the area we have to focus on. And I think Secretary [of Agriculture Robert] Bergland has great potential. He's a farmer. I don't know what direction he'll pursue, and I think he deserves some time to comment. I think he plans to testify before our committee in early March, so it gives him some time to sort of get unpacked and get a program put together. But I share your basic philosophy, I just wonder if you have any specific ideas, say in the farm credit area, that's the one that we're picking up a lot of concern about. Plus, fuel prices, and you're right, we've had a cheap food policy. We've had a cheap fuel policy for a long time. It's changing in the fuel area, but it's still a cheap food policy and the farmer, of course, you're being one, I understand you sell everything wholesale and buy everything retail, so it makes it pretty difficult. Senator John Crofoot: But I think that the energy thing will have some effect on our production, probably. [It would] double the price of natural gas, it is going to affect the amount of irrigation would think. Bob Dole: Some have suggested you know that we cut back on acreage and have tight acreage controls and high price supports, which go back to the programs we had several years ago. Do you have any desire to do that? Senator John Crofoot: No, sir, I’d much rather see us have a fairly liberal set aside payment for those not producing and preserving the soil and the energy and let the market take care of itself. Let the person make the decision whether they'll grow or rest, I guess. Bob Dole: And then there's also, it's been suggested in in the past, we've had what we call an export subsidy program. To make our products competitive with the world prices we’d subsidize the export of wheat, for example. That program was discontinued a few years ago, and there's been some indication or some interest in renewing a program. It's very expensive, depending on what the export subsidy would be. But right now, we just have too much of a product of a commodity and it's wheat. Other producers aren't quite so bad off as wheat producers. Senator John Crofoot: When they asked him to grow road to road, fence to fence and they did, and that's what happened. Bob Dole: That, I think. And then I know one man in America that understands embargoes now. (crowd laughter) Senator John Crofoot: Well, I believe I touched on that lightly. Bob Dole: Alright. Well, hindsight's good, but I- and my reference was to former President Ford, but there- that would be a simplified answer. There were pressures by Mr. [George] Meany, he refused to load the ships and so that’s a lot of power to have. Thank you, John. Senator John Crofoot: Thank you. Bob Dole: Let's see, Junior, Junior Armstrong and George Visser and Dale Lyon. Radio Announcer: These would be representatives of farm organizations whom the senator invited to testify here today, Junior Armstrong of the Kansas Farm Bureau, George Visser of the Riley County Farm Bureau, and Dale Lyon of the Kansas Farmers Union. Bob Dole: If there's no objection, we'll just testify in the order names were read. That satisfactory? Mr. Armstrong, thank you. Junior Armstrong: Thank you, Senator Dole, for the opportunity to make this brief presentation and thanks for having these hearings. And since we ought to be brief, I'm sure that you recognize the economy of agriculture in Kansas, and particularly so compared to the rest of the industry in Kansas and it isn't good and all of us that are in the production of food agree on one thing, and that is that prices are too low. And I speak to you, though, as the President of the Kansas Farm Bureau and on behalf of our farmer members throughout the state of Kansas. We firmly believe that the primary ingredient of a sound national farm program would be one to assure and improve farmers’ access to the domestic and to the foreign markets and we are vigorously opposed to governmental restrictions on the interference with the sale of agriculture products in the world markets. We believe our government should aggressively pursue a policy of export development. We also urge our government to help create a climate for a market-oriented agriculture. We see the need for a farm program and within the farm program, to have legislation be developed by Congress of loans at favorable rates of interest for the construction of on-farm storage facilities. And we believe farm program legislation should provide renewable commodity loans and for storage payments of grain that is kept in storage by the producer for more than one year. We do support an extension of the principal provisions of the Agriculture and Consumer Protection Act of [19]73, provided the act is not amended in ways that it would do two things: one, that it would make farmers dependent on government payments on a continuing basis and two, that it would establish a government-controlled stockpile of agricultural commodities. These are two things that we certainly have concern about. Now, we believe also that maybe it's time for Congress to look at, separately, the commodities that are produced here in the Great Plains in the Middle West as it's done with some of the other commodities. Specifically, here, we would suggest a separate program for wheat, a separate program for feed grains, and a separate program for cotton. Just as the Congress has produced and provided programs for peanuts and for rice and for tobacco and some of the other commodities. I'm speaking to you from a Kansas point of view. I’m telling you what Kansas farmers and ranchers have been telling me, and that is that they do want to continue the principles of the set aside program to alleviate the burdensome surpluses that have been created, and this is particularly true for wheat. Someone naturally will have to define burdensome. But we believe anything that's over a two-year supply of domestic use is burdensome and is price depressing, and for that reason we think the set aside is appropriate for the wheat producing sections of our nation. And three other items in closing. That we believe it's appropriate for the Congress to participate financially in conservation programs. We are the stewards of the land, and we are protecting it for future generations. Therefore, we think it would be appropriate for the Congress to provide an adequate level of cost sharing monies for the truly bona fide, long range, permanent conservation practices which protect and build up the land and the water resources of this nation. And we urge Congress to review the programs of the past and to update them and to participate in genuine conservation programs of the long-range nature. And second, we favor an extension of the P.L. 84 program to continue our food assistance to the needy people around the world. We believe the Congress again should participate with funds from all of us who are taxpayers in an expanded P.L. 84- (correcting himself) P.L. 480 [Public Law 480, Agricultural Trade Development and Assistance Act of 1954] program. And finally, we are vitally concerned about the huge amounts of outside capital that's entering agriculture pursuits, particularly in the production and marketing of our commodities. And we urge that you, Senator, keep a close eye on the new development in the entry of outside capital and agriculture. I'm speaking particularly about the long-term investments which are being contemplated to purchase agricultural land. This involvement in agriculture comes from various pension funds, profit sharing funds, from labor union monies and from other conglomerates. And there is serious question as to its effect upon the truly bona fide family farm. We are fearful that the proponents of this type of activity will seek to create a tax advantage to encourage new and additional outside capital and agriculture and provide a tax-sheltered long-term investment by pension fund programs. Now, it's true we need capital and agriculture, but what we need at this time is not outside investment in or ownership of the land, which is a major resource. Rather we need an emergency loan fund program similar to that that was provided back in 1973 to the livestock operators that was passed by Congress. On these issues we urge your support and thank you for the help that we've had in the past. Bob Dole: If it's satisfactory, I think we'll hear from the witness and I have some questions I'd like to pose, too. Mr. Visser. George Visser: Thank you for the opportunity to appear on this program, Senator. The American Farm Bureau Federation delegates under the convention theme of “Keeping America Free in Century Three”’s launch date determined assault on the growing power of government regulatory agencies, restraint on access and the development of world markets, interference with the market and economy, and the failure of government leaders to produce a comprehensive national energy policy. It was a privilege to be among the Kansas delegation attending this convention in Hawaii last month. My views on the farm program are with Farm Bureau policy. We need to keep OSHA [Occupational Safety and Health Administration] under control. It is well to have safety regulations, but we need- each need to have the personal responsibility for safety and the free enterprise of business. The product liability insurance that manufacturers have to pay for their insurance is way out of reason. Perhaps it is the courts or the juries that award these high judgements on lawsuits that are to blame. The Wyatt Manufacturing Company in Salina, for example, manufactures augers and other machinery. In 1975 their premium for $5,000,000 liability insurance was $4,500. In 1977, their premium was for only $1,000,000 coverage with a $25,000 deductible policy was $210,000. You know who will be paying for this additional expense, and it will also eliminate a lot of community manufacturers. We also want to give you credit, Senator Dole and Representative Keith Sebelius, for the passage of the national prop payment of livestock. It was passed in Kansas first, but because of its parents and Kansas producers had some losses of bankruptcy of the American Beef Producers Packing Company of Nebraska. Kansas cattlemen lost $900,000 and the American cattlemen lost $25,000,000 on that deal. With this legislation, the producer gets his livestock turns first instead of other creditors. We oppose all government restrictions on the sale of agriculture products in the world market. Agriculture exports must not be held hostage in the name of political exigencies or foreign policy. Decisions affecting agricultural exports should be made with full sharing of farmers and the Secretary of Agriculture, and not by labor leaders or government agencies such as the Department of State. I know you've heard that enough. Future embargoes and moratoriums on agriculture exports will only inhibit food production and antagonize foreign customers. Such control will contribute to a balance of despite in our payments. It will also cause more inflation and reduce our ability to purchase needed products such as petroleum, which is already in short supply. The best food reserve in America and for the world is the productive capacity of our farms and the ability of the American farmer. We must not destroy this profit and send its system. We are safeguarding the interests of the consumers through first the tremendous production capacity of American agriculture. The stocks carried by farmers and processors, and the trade. Three, the fact that major crops are produced over wide geographic areas and the flexibility that goes with the livestock economy. We oppose the creation of a government-controlled food reserve in the United States and the U.S. taking part in any international controlled reserve. Government farm programs to improve farm income should be designed and administrated to enhance market opportunities to the end that farmers will earn higher incomes in the marketplace and will not be dependent on government payment for a portion of their income. We will continue to oppose any program which, by excessive high target prices or loan prices make farmers dependent on government payment or reestablish a government-controlled stockpile of any agriculture product. Farm Bureau agrees that minimum use of price and income support measures for agriculture and our economical sound is necessary as a cushion against disaster. At the same time, we insist that support programs must be carefully designed and implemented to avoid conditions which are self-perpetuating to protect our competitive position in world markets and avoid undue interference with market-directed adjustments in production and marketing. Our American agriculture is our country's largest industry. Nearly 25% of our output from American farms goes for export. We must have a strong export market, full production, and our export must go hand in hand. We must take care of this wonderful land and not let it erode with the element. It should be a government shared thing because it is not just for the sake of the farmer, but for the well-being of everyone, especially the future generation, who will be following us. The Lord has greatly blessed our country with prosperity, and we hope to continue to enjoy it. It is very important that we make the correct decisions, whether they be in foreign trade, energy, or what have you. They are all vital to everyone's economic well-being. Dole: Thank you. Dale? Dale Lyon: Senator, first, I'd like to thank you very much and commend you for coming to Kansas and holding these hearings I think to be very beneficial to us. My problem may be a little more urgent than some of these folks’ because I stopped at the bank on the way down here, Senator, and I had to borrow some more money this morning. Fortunately, they let me have it -- at 9%. But I would like to comment. I have a prepared statement that's entered in the record. I’d just comment about two or three things, Senator. Then I'd prefer question and answer. But the- as you know, the Secretary of Agriculture has considerable authority under the present Act to move, to raise the commodity credit loan rates. He cannot raise the target prices. That requires a change of law. We would suggest, Senator, that the Kansas Farmers, wheat farmers, and I'm talking about all grain farmers, of course, are in dire need of money of the banking establishments in need of money that perhaps the Senate Ag [Agriculture] Committee and the members of it might urge our new Secretary to use his authority and the law to raise the commodity credit loan rates on wheat to about $3.50 a bushel and give us some cash out here so to operate with. Help our financial system out. That's about 72% of parity. He can do that, but he needs the indulgence of the Congress to provide a supplemental appropriation to provide the funds for that. We would like to see, of course, as you've heard said several times here, many of the features that's in the Talmadge-Dole bill, the extension of the [Public Law] 480, the Food for Peace Act, the Food Stamp Program needs an overhaul and an extension. Agricultural research needs some- an infusion of funds. Many of these things are very, very good. The only quarrel I have, Senator, with your bill is the loan rates. I- the loan rates for all the many years that I have been a farmer, except for two or three, have been the price. And it doesn't make any difference when you call them the ceiling or the floor. They have been the price. As long as you have too many bushels of grain on hand, it doesn't make any difference what you call them. It's still going to be the price, and the problem is the floor. So, we would like to see in the new legislation that you propose for the next five years that the commodity credit loan rates in particular be raised. Now the target prices are a fine concept, but they are limited to the projected yields on the allotted acres and any farm program and that makes them a very limited source of funds, but they, on the other hand, cost the federal- they take money out of the federal treasury that never goes back. That's different than a loan. Much of the loan money comes back either when the government releases the grain into the markets or when the farmer repays the loan. Now that, on those two things, and then of course, the Farmers Union has long believed that it's necessary for farmers to have a consider- exercise a considerable amount of discipline, whether it be through government programs or individually through their own associations, that the only way we can have stability of farm income is through controlling our production. And through, of course, the encouragement of exports wherever it's possible, wherever we can get it done. I know that in my marketing letter that I received this morning that we have the Foreign Agricultural Service says that we have a record supply of grain on hand and that last year's crop was 1,094,000,000 metric tons, which is 11% more than we produced last year, a world record. The prospect for exports are not all that good, so the farmer is going to have to depend on the generosity of the Congress and the Administration for income in the immediate future. So, whatever you do in the Congress is going to be what we get out here in the country. And with that, I'll conclude and encourage you to– there is one other point, Senator, if I may. There is a bill by Senator Melcher of Montana, I believe, that relates itself to the importation of cubed and frozen beef. And I feel personally, and our organization supports, the entering of that into the marketing quota law. Dole: I think it should be. See your statement made part of the record, then, Mr. Lyon. I think first of all, I think there's general agreement among farm organizations that the key to farm income on the long run is exports. And right now, we've got a lot of it we’d like to export. Mr. Armstrong mentioned a vigorous export policy. I think we've pursued those. We're up in excess of $22,000,000,000 and hopefully by 1980 we'll be reaching 25 or $26 billion. But if any of the three of you have any ideas on what we might do? Either market development or any way to expand exports. Some have suggested export subsidies. I'm not certain whether your organization has a position on that or not. Maybe just start with Mr. Armstrong. Armstrong: Well, I agree. What you're saying is right, except here: right of late, the exports are down some. And I think that what we hear from our foreign buyers is that they like to be assured of the guaranteed supply, they've been concerned with the quality, and I don't know how valid these concerns are, but they do bother us as producers out here because basically when our- when the grain leaves the farm, why, we know that it might have some moisture or something but basically it is a fairly good, marketable product. And I think that we get into the projections of weather conditions across the world, which with the communications we have now and all that, sometimes this has a tendency to cause a variance in the decisions of farmers. And I think it's probably more of our, maybe, organizations. We're thinking about it in Farm Bureau. Rather than sending somebody to these foreign countries from our country to try to get information of what's going on, what the demand is and what the true situation is, I really don't think that probably they get it there. And so, we're thinking about now of possibly going there and employing somebody from that individual country that's dependable and that can give us the real information. And so we really know what those countries want, what their long-range programs are, and try to do it a little different than we've been doing, because we really haven't been too successful. Even though our exports have been up terrifically because we know that basically was a weather condition, and some of us thought it was going to be forever, but I think some of us have seen now, it's not. So, I think this is a real challenge to us, to start looking at everything on a world market rather than just what we can do here in the United States. And it has a lot to do with our planning decisions and what we should be planning and producing. There's always – it seems like there's generally one commodity or two that's doing all right. Now it's wheat that's not doing all right. The cotton people are not complaining too much and even in Illinois, the corn people are getting along fairly good. It isn’t that they’ve got a lot better a situation than we have in wheat. Dole: Dale, do you- Lyon: Well, Senator, on the matter of exports, of course, Public Law 480 probably did a great deal in years past to encourage, and over a long period of time develop, an export to market for farm commodities. That's one of the reasons that I would say that your bill that would renew that, and hopefully finance it to a greater extent, perhaps than it has been recently, would be a great help over the long-term. Another thing that I can't see much in the short term because we just simply have more food. They tell me that the human stomach holds 4 pounds and you take that within some ratio. There are some exceptions. (crowd laughter) Dole: I don't see any in the audience. Lyon: There are some exceptions, but you take that in a ratio with the money to buy the food and you have the limit of the market. What it seems to me, and I'm not an expert in the field, that we ought to do as a nation, is to do what we can to develop buying power in other countries through the export of technology and the export of our own ability to employ those people and get them to work. Getting people to work is the best way to get the money, and if they have the money, they'll buy our food. In the short run, we're just kind of up a stump. And as I think Junior here said and as right now, we just don't– the export market is saturated. And that's it. Visser: I don't know if I have much more to add on that, but these export markets I think are what we need to expand on, but they've done a lot of work on that. These people that- there's a lot of people that are starving and need food and if we can just get it to them so they can buy it. Dole: I think, of course, you want to amend the Public Law for any Food for Peace program to raise that income limit- per capita income limit. We could unload about 100,000,000– I don't want to use that term. Maybe unload isn’t the right word. We could dispose of 100,000,000 bushels of wheat. (crowd laughter) Dole: Any way to get rid of it, I guess. (crowd laughter) Dole: But that would help the market a little. Not much. With a billion and some bushels, but what about the long-term agreements? We have- that was one of the results of the embargo, was a long-term agreement with Russia. We have agreements with Poland and Japan. They've been criticized as not good and praised as at least some assurance for the farmer that we had that agreement. Do you have any position on long-term agreements? Do you think they provide any benefits? Armstrong: Well, I personally, I– we would hope so. You know, if we're dealing with countries that we have confidence in and that they will abide by the agreements and if we're good enough traders, why sure there's advantage there. But the experience hasn't always been that great. And if we don't have the confidence in these countries and that they don't abide to the agreements, and if they don’t- I don't know what the recourse is. And that's one of the concerns I have with an agreement, particularly with the Soviet Union. What is our recourse if they decide not to? To me, I don't think we have much recourse. And then on the other hand, I'd say the one with Japan has been very successful. So, I think it just takes some experience and time to see whether they will work or not. Lyon: Senator,I'm not so sure about the agreement with Russia. I’d imagine that over a period of time that that will turn out to be an advantage to us. I'm, as I say, I'm no expert. I think that the important thing that the United States could do, and I would encourage on behalf of the Farmers Union, that the United States does and that is to get together with the other English speaking nations of the world that export nearly all of the wheat that goes into the export market in the world and sit down, since we all talk the same language, and discuss the possibility of deciding what the price of wheat is going to be, not only deciding how we're going to divide up the exports, but what the price will be. And through that manner, perhaps do more to support the prices of American farmers’ income. I don't think it's going to reduce the consumption a whole lot. I notice that there's more cars on the road today than it was back when gas was $0.30 a gallon two or three years ago. And I think it's about 60 now. That didn't stop anybody from consuming that product. I doubt if people stop consuming food if the price is a reasonable price. I- our organization, as you probably well know, has long been in favor of international trading agreements. That includes prices, and the prices should protect the producer. Visser: I don't know if I have too much to add on that, but we need to- on the long time agreements, Japan has been a good importer of our wheat and they're really important, more than what Russia has. And this agreement with Russia has been more inflationary. When they did buy, they'd buy a large amount at one time. And I think that's what the agreement was to try to even out. Senator Dole: Right. The agreement would, I think, as I recall it, 6 to 8,000,000 tons. 6,000,000 minimum, 8,000,000 maximum. Then they can negotiate for more. But I think, as Mr. Armstrong pointed out, if they decide not to purchase any, I don’t know what recourse there is. I think another idea that, and again, I don’t want to- If you don’t have any comments, I don’t- but it seems to me that we've got the storage facilities in this country and many of the countries who could buy our grain don't have storage facilities. And so I've offered an amendment to the Export Control Act which says, in effect, that foreign buyers can buy the quantity of grain they want, make arrangements to store it in this country and then it wouldn't be subject to any quote embargoes or anything else later on. And it just seems to me this should be attractive to some countries, maybe Japan and the Soviet Union and some of the Arab countries where they have a shortage of storage facilities and hopefully be helpful to the grain producers. We think it will pass the Congress this year. Maybe it'll never be used, but it's occurred to some people that we don't sell to some countries because of lack of storage facilities. I think, and again, it may be too early to comment, but if you have any guidance on what the loan level should be now, Mr. Lyon mentioned $3.50. Lyon: As an emergency short term thing. Dole: And then of course, under the Dole-, Talmadge-Dole bill, since I'm not certain you’re all for it, I'll give his name first. (crowd laughter) Dole: The loan rate, of course, is a percentage of the target price between 75 and 90%. He has 75 in the legislation. I don't think that's high enough. That'd be less than the loan rate now, but if you have any figures on cost production, because I believe they're going to be very important and they can be set down with the department and our own staff economists and talk about cost production. How we're going to determine target prices and loan levels? Maybe you could, if you have any information on that, rather than put you on the spot, what you think the target price ought to be or the loan level, unless you already have an opinion on it. Lyon: I would comment. Well, I'm only going by the most recent figures that I saw from the U.S. Department of Agriculture, and they give the cost of production on the wheat projected for [19]77 to be between, with current land investment costs, at $3.45 to $3.71. Which is- you can probably get a lot of argument out of. The comment, I'm sure you get a lot of argument out of it because I was at a policy drafting session couple of days ago in St. Paul, Minnesota, and that's all we did was argue. We never did come up with the answer, but the higher, the better it seems. I'd like to make a comment about target prices. When we get involved in the target prices. The difference between the loan and the target that should the target prices be necessary to use? It could be quite expensive to the federal treasury. The difference between 75% of the target, as you have in your bills from between $2.18 loan and the $2.91 on the wheat would be something like $0.80/bushel on 2 billion bushels of wheat. You know, assuming that it was that much, that's quite a sum of money. And that's one of the reasons that it would seem to be more expeditious, I guess, of farmers to not bounce off of the federal treasury too hard, but to accept the type of income support that wouldn't directly cost the taxpayer as much money as the target price might cost. And that's my only reservation about target prices. It's a concept that I could live with personally, but I don't know whether the United States of America will live with it or not. Armstrong: Let me tell you how I think the target prices and the loan price can be too high and we talked about cost of production. And it isn't the same for any two people. And so it depends on who you're talking to, who you're going to get what kind of an answer. Now to me, keeping those, what I would call reasonable, and Ithink the Talmadge-Dolebill is certainly in the ballpark. But then if, and I know it's not too popular, the set aside program when we talk about what Dale's relating here, the cost of the on the taxpayer, but yet the real goal of any farm program is to helpthe farmer and his net income here. But a dollar paid out of a set aside program for laying land idle will be the same in net income to we as farmers as about $4.00 paid out in a high loan program if that program from – three and a half to $4.00 -- if the government has to... The farmer goes ahead, has to produce it, has these inputs and the cost of production. Now those figures are coming from an economist from Purdue and I can't think of his name, I think it’s Tweeny, but I read that just recently and I thought it was an interesting point, that here's the point that we haven't really, that the public would accept on a set aside program when we get these burdensome surpluses and a depressed industry like we have now. And so I really think the dollar, the taxpayer dollars will go furtherin aset aside program rather than raising loan prices and target prices too far above the world market and then we're going to get into the thing that we're concerned about, is getting these surpluses built up and the government start taking title to a lot of grain again, like in the 50s and 60s. And I really don't think farmers and ranchers want that. Dole: George? Visser: I agree with President Armstrong that getting the target price and loan prices too high will get wheat produced in other areas where they can produce other crops and have more competition and more surpluses on our hands. Also, we don't want, if they get a high loan rate, government, no doubt, would probably have to take over a lot of this grain and we’d have a government automated Food Reserve. Dole: Secretary Bergland indicated, of course, and it's not original, but. You get the loan rate too high, you're going to interfere with exports and restrict exports, and that's the concern that he has. Another bill that I might just mention that Senator Bellmon, who is a wheat producer, has introduced – he asked me to co-sponsor, but I thought I'd wait to see if there's any reaction – has been co-sponsored by Senator Young of North Dakota and Senator Schmitt of New Mexico. It's grazing and hay. It's called a graze out and hay bill. It would authorize the Secretary to pay a dollar per bushel based on the established yield to the farmers participating in the Graze Out or Hay program. It was extended up to 40% of the farmers allotment and would provide additional pasture and hay. It allows that 40% of the farmer's allotment to be taken out of production of grain and used for the production of beef or other livestock. And of course, Senator Bellman, concerned about the huge carryover. He's concerned about early action, he said by mid-March, the latest this year. And of course, he feels that talking about a dollar per bushel, that'd be much cheaper if we get into some target range or loan level that might cost a great deal more. His theory is that if you try to slow it down right now and wait till we have another harvest or another- Hopefully, if we have some rain and some moisture. Another large crop on hand. Have you given- either group, given that any consideration? Armstrong: Well, Senator, we, our organization has a very- many splendored- we're willing to try anything particular that will work, you know, or hopefully will work and one of the- that would be- (cut off by Senator Dole) Dole: You could be a Republican. (crowd laughter) Armstrong: It doesn't seem to be too many of those around anymore, Senator. (crowd laughter) Dole: I'm going to try to amend the Civil Rights Act this year. (crowd laughter) Armstrong: Well, I do think that's a commendable idea. I hadn't heard about it, but there’s been some discussion about the possibility of trying the old permanent soil, whatwe used to call the Soil Bank, as an alternative to a set aside. Well, that would be a form of a set aside, of course. And our organization has no reservations about a set aside. Our policy says that. Our only concern is the concern that the guy that's in charge of the Office of Management and Budget gets a little tight with the funds, and I appreciate that as far as that goes. Otherwise, a set aside would probably be more acceptable to farmers in general than any other approach and including this temporary type of program you're talking about would be more acceptable to farmers. The reservations that we offer is that it may not be as acceptable to the consumer who and the people who talk about balancing the budgets and all that sort of thing. And so where I'm not- I wouldn't want you to get the idea that we would oppose that approach. Dole: It is a new idea and it's one that Senator Bellmon, I think he introduced it on February 4th, so it hasn't been in in the mill very long, but I know he is pushing for hearings hopefully next week. Because as you understand, if we’re just going to do any good this year, it has to be done rather quickly. Have you had a chance to look at that at the Farm Bureau? Armstrong: No, I don't- we don't have a policy on it. I have asked Doctor Smith and Doctor Good to give me a little research on what the grazing for cattle, a graze on out two or three months in the fall and then on out into June. And what they could expect for pounds of beef on a 500-pound critter, and how that would compare to what we might expect. And I'm asking them for some professional help, but in my own mind, passing that out doesn't look too bad even at $0.30 to $0.35 beef, that it might be as good as the wheat crop. Of course the problem we have this year, we don't have anything to graze. It's too short. But I think on normal conditions, though, I think there's some areas here that, particularly when we get in the southwest part of our state where there's no water irrigating, why, and that's about all we can raise is wheat. I think maybe here is a program that we're hoping to get some information that maybe we can go to our members with and at least consider it. So, I think it has merit. Dole: I think maybe one area, and I don't want to keep these witnesses, but that’s farm credit. You mentioned, Mr. Armstrong, maybe we ought to have some bill similar to the Emergency Livestock Bill, which Congress passed, what, [19]73? Armstrong: [19]73, yeah. Dole: And it's my understanding, I think there have only been about 170 loans to Kansas cattlemen under that program. Probably a total of, what, $30 million? I don't know if it’sbecause of administration or because of demand, but that has been suggested because we've known and picked up in our other hearings that the shortage of credit, particularly with young farmers, and that there's no place to turn to. Everything is tied up. And they haven’t any operating capital at all. And we've suggested we increase the operating loans, Farmers Home Administration operating loans, raise that limit to 100,000. But that in itself may not be of any help. So, if you have any specifics in that area. Or maybe the Livestock Guarantee Program is working better than it was. It'd be helpful to know that. But are there a lot of farm sales because of present conditions in Kansas? Armstrong: I'm not really positioned to answer that for sure. There's farm sales and in our own particular, our Kansas Farm Life Insurance Company, we are experiencing more interest in loans. They're not new loans, but they're refinancing loans. And what they're talking about is that they owe the local bank 50 or $75,000 and the only thing they've got is a little equity in that land, yet, because of the appreciation of land over the years. And so what they're thinking about and asking, is more of trying to find that their best way, I think is refinancing their farms. Which some of us older guys, it kind of scares to see people have to do that because the land is a pretty sacred thing with a lot of us. And when we start losing our land, why, we really get concerned. But from that point of view, I would say yes, there is a trend toward thismoreand it's natural that it would be, and it's probably more so in some areas than other areas. But northwest part of our state, I think is, and also the southwest. But the western part we’re strictlywheat,dry land, and they haven't had a good crop for the last two or three years are really in a financial bind. Dole: Well, will the Farm Bureau and the Farmers Union have the cost production figures available to base some of your members’ cost production, say for wheat and other commodities, by the time we start our hearings? Or before they end? Armstrong: Well, Senator, we don't have anything like that. And I don't know how you get it. You can write and they'll send in what their cost is, and they'll just vary from below, around $2.00 on up to 6 or $7.00 a bushel, and I have neither in their own right. In their own individual. And then to try to average that out, you just really don't make anybody very happy, I don't think. And so, we don't have that. Lyon: Well, I don't think we could come up with an exact. You know, the Department of Agriculture probably is as good and responsible an agency as any to go by. I see no reasonnot to accept their figures, personally. As Junior’s say there, you know, it varies with every farm. If I gave you mine, it would probably run somewhere like the Department of Agriculture's averages, on my farm. But, and if I may go back to the credit question, Senator. We ran into a problem, I don't know if it's quite as sudden as it may seem. Maybe people just realize it now more than they did a short time ago, but with the inflation and the cost of running a farm and the land prices, a lot of the bankers in rural areas in Kansas run head on into banking restrictions on loans from real estate. A lot of banks have a limit that it relates to the amount of capital they have. I know my bank runs into that and was required to transfer a lot of its real estate loans over to the Federal Land Bank and other agencies, then find themselves without much collateral to fall back on to make loans to farmers for operating. This turns out to be a very complex problem for the bankers. They know your problem. A lot of farmers are probably worth the money, but they have to drop back to a second mortgage on the land to have anything on it. So, anything that could be done to expedite the credit situation would be very helpful to farmers all across the country and it's appreciated, whatever is done. Visser: I think that the money flow’s getting real tight and the elevator man told me that he could send his accounts receivable along, show them how they were. He had a lot of bills that he needed to collect so the money flow is very close. Dole: I think finally, because we do have some other witnesses, and I appreciate your responding to the questions. I think Mr. Armstrong indicated some concern about the ACP [Agricultural Conservation Program] program and I think you're right, if we're talking about long-term practices and we ought to invest the money. But if it's a short-term practice that it's not really conservation but increases production. Then, I'm not certain that's a proper role for the government. And there have been some changes in that program and I think there may be some more. In fact, we're trying to suggest some reforms. So, if you can have some more ambitious projects, we really talk about conservation and raise the limits. You can do a little better in those areas. So, we think there's a lot of outdated and then there's unnecessary provisions in the present act that can be changed. And finally, with reference to farm storage, we discussed, about a year ago, I think. I think you testified about the day on farm storage, giving the farmer some incentive and some help to build storage facilities and some payment for storing his grain, which seems to make a great deal of sense too. Do you have any other view on that, Dale, or? Lyon: No, I think that I would agree on. Dole: George? Visser: I would agree too. That needs some incentive for farm storage and maybe extend these loans on that wheat. Armstrong: That might even go so far, Senator, as to make loans to small local elevators to help them build silos for storage, that sort of thing. Dole: Well, I appreciate very much your testimony and I want to again stress that just because I'm the only one here, it doesn't mean that it's not going to be viewed by those in the committee who have an interest. Now, some aren't concerned about wheat legislation. And I would just say I assume Senator Talmadge is going to look to those of us from wheat producing states to try to work out some acceptable piece of legislation. And so, we appreciate very much having the views of the three of you. Visser, Armstrong, and Lyon: Thank you.Thank you, Senator. Dole: Next, wheat and feed grains. Frank Boyd. Helen Bosch. And Harry Hartner. Radio announcer: These representing the farmers’ interests, Frank Boyd from Southeast Kansas, from Moran. Helen Bosh from Mayetta, Kansas. Dole: (in background) Ladies first. Announcer: And Harry Hartner is from Manhattan, KS. And you're listening on KSAC, Manhattan, Kansas, Kansas State University, to this fact-finding hearing of the Senate Ag [Agriculture] Committee, now back to the Senator. Dole: I think it's all with the men, since they haven't passed the Equal Rights Amendment. Yet in all the states who will let Mrs. Bosch proceed, and I might as general statement, if you have a written statement, it will be made part of the record, whether you read it all or not, or whether you summarize it, you can do it any way you wish. If you'd rather summarize it or maybe comment on some things that have been said. The statement will be made a part of the record. I think you have to bring the mic up just a little bit. Helen Bosch: Thank you for letting a farm wife talk with all these men. We are liberated. We don't need the ERA [Equal Rights Amendment]. Droughts, natural gas, water supplies, fertilizer, and above all, price are but a few of the problems facing the grain farmer today. The grain farmer cannot continue to produce at less than cost of production, which on wheat is around $3.50 to $4.00. When you continuously, year after year, get less than cost, then you are building a debt. When the debt gets to be such a large part of your real net worth, you're bankrupt and out of business. General Motors, Alice Chalmers, Goodyear and so on down the line do not sell for less than their cost of production, or for that matter, without return on management or investment plus a profit. Why then should the grain farmer? When we had 5.50 oil, we had 2.25 wheat. Why shouldn't we have 4.50 wheat with 11.50 oil? When cars were $3,000, we had 2.50 wheat. Cars are now $6,000-10,000 and we still have 2.50 wheat. When bread was $0.15 a loaf, we had 2.50 wheat. We now pay $0.65-0.80 a loaf for bread, and wheat is still $2.50. The cost of fertilizer to raise that wheat has risen from $40 a ton to $135 a ton, and more. We still have 2.50 wheat. We are told the cost of production on raw materials is impossible. It would threaten world trade. This is not true. We had parity prices in the late [19]40s and early [19]50s. We had the Steagall Amendment [of 1941] to guarantee parity. We didn't have the national debt, trade imbalance, and the economy wasn't in trouble. We had near parity in 1973. Again, we had a balance of trade and an upswing in the economy and no surpluses. What is true is that the economy of the world would improve if we had parity. If trade were equitable, if proper tariffs on imports were established, if nothing were imported into this nation for less than our price, thus allowing, then the United States market would become the world price, thus allowing the underdeveloped countries to purchase our grain and sell their commodities at their cost instead of the exploitation of those countries that we have now. Other governments subsidized their raw material producers to give them cost of production to protect their own domestic food supplies because they have to sell on the world market that is below their cost. A world price, which is set basically by the United States. Their economies are in difficulty also because of this inequity. If we had equity and trade not only in grain, but manufactured goods as well, it is doubtful we would have such a surplus of production. When all people are prospering equitably in a well economy, food will not be in such a surplus situation. We see this was true in periods when there was parity. And when all commodities are in balance, you do not see producers jumping in and out as you do in times of imbalance. When and if surpluses would develop, then some quota systems set aside would- could be implemented, but always with the quota being priced to parity, the excess perhaps lower. Farmers can live with that. What we can't live with is our prices below production costs, much less return on our investment, labor and profit. It is inconceivable that our government is exploiting its grain and other raw material producers while building a national debt on artificial wealth. Pumping new dollars into the system only cheapens the value of the dollar, lends more dollars on the same collateral. Thus inflation. There is no cure except by raising the price of raw materials. The only new wealth available. Yet our government is selling out the grain producers as well as all other agricultural and raw material producers in the interest of the so-called consumer, when in fact it will destroy our monetary system and the nation as a whole. The farm bill that is passed will determine the whole course of the nation, whether it recovers economically or we head for a calamitous depression. Five more years without parity or equity in the market, and we will no longer have free enterprise in agriculture. So, the consideration you give to all these matters in the coming months is critical. May God help you to make the right decisions. Thank you. (crowd applause) Dole: Thank you. I think like the last panel, we just maybe go to the next witness and then ask some questions when we finished. Frank? Frank Boyd: Thank you. Thank you, Senator. My comments are going to be on a much narrower plane than the previous comments. I'm assuming that the Talmadge-Dole bill may, or one similar, will eventually be passed that includes disaster payments. And I have some suggestions on those. If we do have disaster payments, I would suggest they would be paid on a graduated scale determined by the severity of loss. Two, that we do not use old allotments as a basis for payment for disasters, nor use any new method that uses past history of individual crops. Dole: I think now we go back to what, 49 and 50 for wheat and- Boyd: Fifty and 51, I believe, anyway. But even a new allotment based on specific crops in past history, I would be opposed to. And three, that we use a total of all crops planted on each farming unit as the basis for eligibility and amount of payment. It has become apparent that the definite sharp break, or trigger point at which we receive these payments for disaster, as they are now administered, as the law requires it. One or 2 bushels can keep a man from receiving a payment. In fact, 1% decrease in production can increase a man's gross income per acre as much as 20%. So therefore, I would say that we should have a graduate payment based on severity of loss. So that we would never have a payment for a lesser production, meaning a higher total income. And I think the alliance brought out my other points under the present allotments or any allotments, a man, in order to get the maximum benefit from disaster payment protection, must stay within his allotted acres or substituted crop. This sometimes necessitates some very uneconomic farming on our part. Only when we can plant the crops we want and the amount we want according to the way the weather dictates our financial situation dictates and our machinery dictates, can we produce at the minimum cost. So that would lead me to say we should base all disaster payments on the total acreage of all crops on any unit. This would be the current planning each year, no carryover of history. And in doing this, I would suggest using a percent of the normal yield realized on each crop weighted to the acreage planted to arrive at the percent to compare it with the trigger point. In other words, right now we could have 900 acres of a crop, with a bumper crop. But another crop with an allotment, only 100 acres and get payment on it and yet have the income off the 900 acres. So actually, that's not a true disaster thing, but conversely, if the opposite were true, it'd really be a disaster and we wouldn't be completely covered. Only this way, we would be. Now under the old allotment program, I know a lot of people in one crop area, such as western Kansas and the wheat, found that they had free acres, we called them then. They didn't have allotments on, they had no alternative. While those of us in the eastern part or farther east had alternative crops to plow on the free acres such as soybeans. I think if, under this situation, it could perhaps be similar, only to a larger degree. In other words, he wouldn't be covered by disaster payments if he planted his entire acres. But if you had them on these total acres of all crops, it'd be very comparable between the two areas. Senator, you did ask you about cost of production and I would make one suggestion. Seems, I think in the Talmadge-Dole Bill you talked about 35 average, 35-year acquisition costs, something I'd suggest we do not use a land cost factor as such, but rather like those of us who lease ground. Such as in our area, if you sewed wheat, total operating costs, including our two-thirds of fertilizer, not including the landlord's share, and use two-thirds of crop as the production. And this way the land will take care of– you don't have say 6% or 8% or acquisition cost. Thank you. Dole: Thank you. Harry Hartner: Well, thank you, Senator Dole, for this opportunity to talk. I'm Harry Hartner from Manhattan. I'm speaking just as a livestock and grain farmer. I think it’s been mentioned the American farmer is probably unmatched in his ability to produce an abundance of quality grain. And because of this potential supply, and with no production controls, we must look to the export market to maintain prosperous US agriculture. And we responded to the opening of the new export markets by increasing production, being assured we would have full access to these markets, and the limiting of supply to some of our export customers, plus the increased world grain production, has put us now in a surplus situation. I think most farmers like the system of little or no production controls which we have experienced in the last few years. Only now we are reaping some of the results of this all-out production. Oversupply and increased export competition have resulted in returns below production costs for some of our major products. The real question is who is responsible for the surplus? If we are asked for full production and produce more than our domestic and our export markets can absorb? Does the farmer bear the burden himself by taking a loss on his production? Or is the public responsible for the surplus so all people in this country can be assured of an adequate food supply? I'm basically opposed to the concept of set asides and government payments, allotments, and all the controls on productions we operated under the surplus years of the 60s and the early 70s. Yet farmers cannot continue to blindly produce with no assurance of a profitable return for our investments with the costs increasing as they are. If the farmer is entitled to receive some compensation from the public treasury when the market price falls below production costs, I think the production cost would have to be determined for different areas of the country because of cost differences. I think this compensation should be only on a part of the farmer's acreage and this would discourage production on the remaining acreage until supply is brought back in line with demand. Those of us who want less government involvement in agriculture should strongly support the Capper-Volstead Act, where farmers can market their products to their cooperatives. Only by joining together and pooling our products can we increase our strength in the domestic and the export market. If the cooperative system handles nearly one-half of the grain produced in this country, but we export somewhat less than 10% of the grain, I think through our cooperative system, farmers should expand our direct selling to the domestic and our export buyers. And this way we can assure ourselves of a larger share of return on our products. I think this market system would keep the control of the commodity in the hands of the farmer and keep the government out of the grain business and assure the domestic and the foreign customers the quality and the quantity of the product to meet their needs. Thank you. Dole: Thank you very much. I think, commenting on something that Mr. Boyd mentioned, that's disaster payments. There has been some interest in whether we revise our crop insurance program and maybe replace the disaster program of some revised crop insurance and expansion. I've introduced legislation that would do this. Right now, of course, the problem with crop insurance is limited to certain commodities in certain counties, and sometimes you can't buy it when you need it the most. So, we've been trying to look at this possibility. But as you've indicated, disaster payments are limited to producers of acreage allotments for cotton, wheat and feed grains, and there are a lot of loopholes in the program. So, we've suggested that perhaps we expand the federal crop insurance program nationwide and make it available to all producers of wheat, cotton, corn, rice, grain, sorghum and barley. And other crops would be covered as now on a sort of county-by-county basis. And I think the point that might cause some controversy depending on the philosophical attitude would be we provide a 25% federal subsidy of the premiums farmers pay. It reduces the cost of insurance and of course we're trying to get the participation up among farmers. Now I don’t know if this would run counter to someone's view of government or not, but we'd also raise the capital stock requirements and would provide for insurance for preventative planning losses caused by floods. And I might just add, as an aside, on February 2nd the new Secretary of Agriculture, Secretary Bergland, stated his view that the disaster payments program should be replaced and the crop insurance program should be expanded. So, there is a considerable interest in this approach. The bill is co-sponsored by Senator Curtis and Senator Young and I just raised that as something that might come up in the course of the hearings and if you have any comment on that, I'd be pleased to have it for the record, but- Hartner: I'm not informed on that. Dole: Right. Let’s see now. Mrs. Bosch, did you have any specific ideas on target price and loan levels, or-? Bosch: The fact is, if parity were guaranteed for all raw material products, we wouldn't even be concerned with the loan price or with the target price. Definitely, if we're going to have a loan price, the loan price has been the market price for years, it always is. With few exceptions. So, if you're going to have a target price, then the target price should be equal to cost of production. Dole: There's some advocating, I don't think it's going to pass, that you have, in addition to cost production, you have 10% of that as a profit. I don't know what your view on that would be, but it has been suggested by some in the Congress that the target price should reflect not only cost production but a percentage of that as a profit. Now I don't see this passing the Congress, but it's a concept that's been suggested. On the theory that if you just make cost production, you can't stay very long either. Bosch: That's true. Every other business, and farming is indeed a business, and it's getting to be a bigger business every day. And the farmer is entitled to a return on investment as well as the profit, as every other business has. So definitely we should be- should have it. Dole: But I think the big question would come in the Congress and probably across the nation is why the government should provide profit to farmers any more than the local co-op, or small business or whatever. I think that would be the highly controversial point. I just raised that because it has been suggested that Congress it, it ought to be testified, to be testimony supporting that concept. And I wanted to see what your view is. What about loan rates and you say target price should be the cost of production. What about the loan level? Do you have any- (cut off by Bosch) Bosch: Ok, I meant loan rate should be. I misspoke myself, but loan rate should be. But the point is that the economy of this country is based on the pricing of raw material products and the whole economy is sick because of the low prices in agriculture and raw material production. And so, it would be to the consumer’s benefit and to the economy of this nation to have parity prices for all raw material products. Along that same line, you must have minimum wage laws that are also equal to parity so that consumers can buy at parity prices. And then you would have a well economy and a balanced economy and you would not have need for all of the social programs and the things that are costing government and taxpayers. Dole: I think there will be an increase in the, I’m just speculating, probably in the minimum wage laws. And I'm not certain in some areas. That's all of the good because we find many young people denied employment because of marginal profit businesses, so they can't pay it. But I think that's another issue. But under your theory it would work all right. What about government-held reserves? I don't know that you touched on that. Or, I don't say government-held, but reserves generally. Do you have any views on whether we should have reserves? Quote food supplies or grain reserves or-? Bosch: We probably need some reserves in case of drought as we've seen in the last few years, but they should be farmer-held so that the government cannot use them to depress prices. Dole: That's the view that I share and I think we've seen in the 60s the use of primarily corn to depress prices. We were told they were stabilizing prices. But they are always stabilized prices always seem to be low prices, low stabilized prices. Do you have any comment on reserves, either of the other witnesses, Frank or Harry? Hartner: No, I don't think I would have. And I think it's general agreement among most farmers that we've had the experience of the past, how they've been used and I'm sure that we're pretty leery of any government-held reserve. I might make a comment about the production costs. I think a good maybe source of information on them, as I mentioned in my remarks that they probably vary, and I think it's generally agreed they would. But I think our land grant universities have some pretty good ideas on specific areas of what the costs are. I think these are going to vary nationwide and well just maybe even area-wide in Kansas. And I think they can give us some information maybe that would kind of give us a range on where we're to set these. Dole: Right. We intend to ask and certainly have the cooperation of Kansas State University in furnishing the information they have. The points you raised, Mr. Boyd, about the figuring production cost of 35 year, mentioned in our formula, that I think was raised in Goodland. I think it may have some merit. You wouldn't have that problem if you do it the way you suggest. So, I hope that we can pursue that. And I might just say for the benefit of all the witnesses, what we hope to do is go back through the testimony once it's printed and typed and pick out some areas for the staff to look at and see if we can interest some other people in taking a look at what we think are positive points. If they're repetitious, we'll make note of that. But when someone raises a point that we think off the top of our head. If it needs to be looked at, we want to do that. We appreciate very much your testimony, and if you have any additional thoughts, I'd be happy to include them in the record. Thank you. (crowd applause) Dole: Our next category would be financial needs and resources. Bob Laflin, Dale Schertz, and Laverne Becker. Announcer: Bob Laflin, a cattleman from nearby Olsberg north of Manhattan. Dale Schertz from Beloit, a farmer there. And Laverne Becker, who's big in wheat farming out around Russell. As they move up to take their position at the table here. This, if you've just joined us, a fact-finding hearing for the Senate Agriculture Committee. One of six that Senator Robert Dole of Kansas is holding in Kansas. Now back to Senator Dole. Dole: And just in the event you weren't in the room, I might suggest that you can handle your statement any way you wish. You can read your statement or summarize it and make comments on anything that's been said or anything that you may have thought of that may not be in your written statement, but in any event, your entire written statement will appear in the record. And we'll start, as you recall, Bob, you want to go first? Bob Laflin: Senator Dole, colleagues of agriculture, I'm Bob Laflin, a rancher cowman from Olsburg, Kansas. What I have to say, I could probably be more convincing in my bull yard, 15 miles north of here, Senator Dole, but will attempt to convey my feelings and feelings of people like myself. I am the father of four children, 2 in college, one in high school, and one in grade school. The subject I'm going to relate to you, I feel in my own mind that I'm qualified to do so. I am very much aware of the big job that you have representing the great state of Kansas in the United States Senate, but we as farmers also have an equal responsibility to feed the nation, and we need the man who is our voice in Congress to help us solve the dilemma that we're presently in. I’m here today to tell you about rural America. People who live and work the farms and ranches. People who don't participate on welfare and food stamp programs. And most of all, people who are trying to produce enough of the most important commodity for the very sustenance of life itself, food and fiber. It is my opinion that most people who control Congress have what I call tunnel vision. The only thing they can see at the end of the tunnel is cheap food, very much unaware of the problems involved or a misunderstanding of what it takes for the production of food. They need to have someone convey the thought that a man and business cannot continue without a profit. You have heard the cliche used, “you never want to drink until the well goes dry.” People presently are worried about the energy crisis, but do they realize that with the present drought cycle combined with the depressed market, we could very well be on the edge of a food crisis? I have often thought of what would happen if ‘Mrs. Housewife America’ would go to the grocery store and find the rationing of beef, poultry, milk and canned goods. Let's hope this never happens. Only when the men in Washington can combine the ingredients properly to allow American agriculture to have their fair share of the economic pie. That's the only way we can keep it from happening. If America can project defense spending and defense needs into the year 2000, why can't we do the same with agriculture? My dad used to tell me that if you picked on someone long enough, they would put up with it for a while, but after that, they would either quit or give up. The American farmer isn't going to rebel because this is against his principles and upbringing. But he will quit and he will sell out. At the present time, there is no phase of American agriculture that you could say is profitable. The grain farmer, the livestock producer, the dairy farmer; none of these are presently showing a profit in their business. But only a wider gap between their heavy indebtedness and ability to operate under the skyrocketing inflation. It's only a trap, which in the end will cost you years of hard work and tight management to be a total loss. Not since World War 2 has there been such a depressed situation prevailing in agriculture. If it continues much longer, it will create a negative syndrome attitude in the people involved. What I mean by this is that they will become weary, tired and eventually have the attitude all efforts are to no avail. My concern of a negative syndrome is that those involved will not only become dissatisfied to the point of selling out, but they will encourage their children to go into other occupations other than agriculture. I truly wonder, Senator Dole, when these people are forced out, who will replace them to do the nitty gritty work that is required to make a farm or ranch go? It is a proven fact that you have to have the love of occupation to make such unpleasant work as cleaning hog manure out of a finishing or a furring house. Maybe you don't have an idea what this is like, but I'll guarantee you one thing. People you hire to fulfill this task won't stay with you over a long period of time. You say, why not install a pit-type building that you can back up and pump the feces and spread it out onto the land? This brings into another situation of crisis. Let's take a bank for example. I know of one bank that today's depressed agriculture situation and inflation has more money loaned to 6 customers than all the entire Ag [Agriculture] loan department had loaned 3 years ago. The banks today are more vulnerable now than anytime in 30 years. This is why proper, and Iunderline proper, government assistance in financing is so important. Let me show you an example. We take SBA [Small Business Act] law 94-305. Are you familiar with it? It was just, I think, recently passed in the Congress. SBA [Small Business Act] guarantees up to 90% of 500,000- (audio cuts off)