March 21, 1978
Page 7767
Mr. TALMADGE. Mr. President, I ask unanimous consent that I may have a brief rollcall, without it being charged to either side, for the purpose of getting word to the distinguished Senator from Maine that there is an amendment on the floor, if he wants to use the remainder of his time.
The PRESIDING OFFICER. The Senator from Kansas (Mr. DOLE) time has expired.
Mr. TALMADGE. We would like to get word to the distinguished Senator from Maine concerning the amendment if he wants to use the remainder of the time to come to the floor. I ask unanimous consent that I may have a brief rollcall, without it being charged to either side, Mr. President.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. TALMADGE. Mr. President, I suggest the absence of a quorum, and I ask the clerk to let the Senator from Maine know that he is desired here on the Senate floor.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk called the roll.
Mr. TALMADGE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I yield myself 10 minutes. I find it difficult to believe that everyone else is talked out. Perhaps I can stimulate a little more discussion.
Mr. President, no one questions that farmers in this country face an economic crisis. I understand that crisis and I sympathize with those who are concerned about the fate of the family farm.
In my own State, agricultural output is almost entirely from family farms.
In Maine as in the rest of the country, families have proved to be an efficient social and economic unit.
Family farms are the backbone of rural communities.
They are important for the food and fiber they produce and the way of life they preserve.
I am committed to these families who produce food for our own people and much of the world.
The amendment offered by Senator Dole, originally the Flexible Parity Act of 1978, is designed to provide relief for producers of wheat and feed grains, representing approximately one-third of America's farm output.
It also provides assistance to growers of upland cotton.
Falling prices, the burden of interest payments and increased operating expenses have caught these farmers in a cost-price squeeze.
Of course, not all farmers are so situated.
Wheat and feed grain producers have suffered while cattle, poultry and hog producers have actually benefited from low feed prices.
Nevertheless, there is a serious problem.
This amendment establishes a system of graduated target prices for wheat, feed grains and upland cotton based on the acreage a farmer chooses to set aside from production.
The amendment also increases the minimum loan rate for the 1978 crops of wheat and corn, raises the prices controlling the release of Government and farmer owned stockpiles of grain and increases the authorization for the Food for Peace program (Public Law 480) .
The purpose of the amendment is to remove acreage from production and increase farmers' selling prices and income.
While the problem the farmers face is very real, we can not afford the luxury of considering this bill only in relation to their needs.
Careful thought must be given to the impact this amendment will have on inflation, food supplies and the Federal budget.
I remind my colleagues that because we now have not just the Dole amendment, but the Dole amendment taken together with the McGovern amendment to the Talmadge amendment, all of these figures which I use and which other Senators have used are suspect. But these figures give us an order of magnitude that we ought to take into account.
Overall prices are expected to rise 6.2 percent in 1979 under current law.
The Congressional Budget Office estimates the amendment would add 0.36 to 0.5 percent to the rate of increases in the Consumer Price Index.
This will cost the consumer up to $6 billion in 1979. This amendment would increase the annual food costs for a family of four by $100.
These costs result not only from the acreage that is taken out of production but also because the loan rate for commodities and thus prices will be increased by direct Government action.
These estimates take into account the fact that grains are only part of food costs and food only part of the Consumer Price Index.
Further, these figures reflect only the "first round" effect.
The Budget Office estimates that by 1981 the total inflationary impact would be nearly twice the first round effect because the more rapid increase in consumer prices would result in higher wage increases and thus higher product prices in other sectors of the economy.
This amendment could reduce stocks to a dangerous level and increase the risk that crop failures will result in food shortages and runaway commodity prices.
According to Congressional Budget Office estimates, compared to current law, this amendment would result in a diversion of about 29 million acres.
This in turn will result in a 20 percent drop in production of wheat and feed grains.
Wheat stocks under the amendment would drop by about 33 percent and feed grains by about 47 percent by the end of marketing year 1978.
Wheat stocks in the farmer-held reserve would be reduced by 50 percent and feed grain stocks in the farmer-held reserve would be reduced by 97 percent compared to current policy.
The stocks of farmer commodities at the end of 1972 — if we are interested in history — were insufficient to prevent massive increases in corn and wheat prices when consecutive major crop failures took place in 1973 and 1974.
Under this amendment wheat stocks would be below their 1972 levels and feed grain stocks would be only half of their 1972 levels.
The risk of shortages and inflation would increase and the size of the potential price increases would be larger.
This action is being proposed at a time when world grain consumption has increased 50 million tons in each of the past 3 years.
Given these increases in consumption and the limits on production in this amendment, the resulting stocks are not big enough.
In the last 2 years, we have had unusually good weather and bumper crops.
We cannot assume this will continue indefinitely. We must anticipate the lean as well as the bumper years.
Without adequate stocks, bad weather here or abroad could result in a problem of the same magnitude of 1973 and 1974.
Turning to budget costs, this amendment will result in additional net outlays of $3 billion through fiscal year 1979, $2.4 billion of which will be direct payments to farmers, not loans. It increases the farmers' dependence on Government payments and on Government-controlled prices.
The fiscal year 1978 savings in this amendment are illusory.
They are simply the result of early repayment of loans.
Further, although this amendment authorizes higher loan rates only for fiscal year 1978, I am sure all of us realize the difficulty of lowering these rates in the future.
The administration contends the current law has not had time to achieve its intended results.
There is some evidence to support that contention.
Wheat farmers, have placed nearly 220 million bushels in the grain reserve, two-thirds of the administration's goal of 330 million bushels.
I would emphasize here that this amendment would cut the reserve program.
Although I am sympathetic to the plight of farmers in financial distress, I believe we should place their problems in proper perspective.
The PRESIDING OFFICER. The Senator's 10 minutes have expired.
Mr. TALMADGE. Mr. President, I yield an additional 5 minutes.
The PRESIDING OFFICER. The Senator is recognized for an additional 5 minutes.
Mr. MUSKIE. I thank the Senator.
I remind my colleagues that in 1973 and 1974 grain prices soared. Farmers who were meat producers lost their shirts. They were forced to butcher their stocks and consumers reaped the advantage of exceptionally low meat prices. As grain prices have come down profitability has been restored to meat production and herds have been replenished.
During that period of exceptionally high grain prices many farmers believed that $5 per bushel of wheat was here to stay. Consequently they bought more land and invested heavily in new machinery and implements. In the process the price of farmland soared and farmers now find themselves with unrealistically high mortgages.
Experience should have taught us by now that efforts to drive up grain prices will only serve to drive up the price of land, proving the old saying that in agriculture land gets all the profit.
Now prices for grain have come back down. As a consequence many young farmers, people who have just entered farming, are hurting very badly. They purchased land at unrealistically high prices which in turn reflected the ephemeral phenomenon of high grain prices.
I sympathize with them but I do not believe that we should prescribe a remedy which will take us on another roller coaster ride of higher prices followed by disastrous contractions. These trips will leave many Americans high and dry with only frustrated dreams to carry them through the tough times.
Should we begin to think about the long-term consequences of our actions in the agriculture sector?
Should we continue to approach these problems on an ad hoc basis without carefully weighing the budgetary, fiscal, and economic factors which affect American farmers, and about which we have inadequate information today, before we vote on this three-headed bill?
Should we continue on our present course, which calls for Federal direct and indirect burdens on us as taxpayers and consumers?
Should we continue to ignore the budget process as we rush headlong into still another ill-conceived series of programs to bail out American farmers?
I believe we must undertake a responsible, prudent course and let the current farm program — which we enacted into law with such high hopes on the part of the sponsors just last year — have a chance to operate.
For these reasons, Mr. President, I must oppose the Dole amendment. I reserve the remainder of my time.
Mr. DOLE. I would hope the distinguished Senator would yield back any unused time.
As I understand, the impact on retail prices and consumer expenditures in 1979 will be plus 1 percent under the Dole proposal and plus 1.3 under the Talmadge proposal. As I indicated in the absence of the distinguished Senator from Maine, as far as corn is concerned, under the Dole bill there will still be about 1.1 billion bushels, and wheat will be 957 million bushels, which is more than adequate.
I would also say, with reference to the comments of the Senator from Maine, I certainly do think we have to look at the long range. I think that is what the farmers have been telling us for the past several weeks.
With reference to world supplies, most farmers feel, and I think the records reflect, that we are sort of the world's granary, that we will have our farmers hold wheat at their cost. They cannot even sell it for the cost of production. They have sort of become the world grain suppliers. That is certainly not fair to the American producer.
Our bins are full, and that is another reason prices are depressed. That is the reason that both myself and the distinguished Senator from Georgia are trying to address the problem, to reduce the production unit in an effort to take some of the pressure off the market, which we hope will be reflected in higher grain prices.
This is not to be reflected in higher Government costs. I think the farmers themselves share the views expressed by the Senator from Maine, as far as Government cost and Government spending. I believe they are sincere when they say, "We do not want a subsidy. We want our profit from the marketplace."
We have tried to respond with responsible legislation. It is probably not perfect, and there are probably a great many things that can and should be done to tighten it up. But it seems to me it addresses the problem in a responsible way. I would hope whatever the Senator from Maine has in mind does not succeed. I am not certain what he has in mind. Will it be an up or down vote on the Dole proposal?
Mr. MUSKIE. Mr. President, I ask at this point for the yeas and nays on the amendment. I do not intend to move to table it.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. MUSKIE. I have 3 or 4 minutes. I shall not use all of that.
As fast as I can get information that bears upon this amendment, I shall provide it. I now have a table showing the CEO's estimates on carryover, beginning with the year 1972. For example, the wheat carryover in 1972 was 1 billion bushels. That was not sufficient to carry us through the next 2 crop years and we had escalating prices, with all of the consequences that I described. That was 1 billion bushels.
At the present time, we have 1 billion bushels.
So it was 1 billion bushels in 1972, and it is 1 billion bushels today.
With the Dole amendment alone, in 1979, that carryover would shrink to 700 million. Under Talmadge alone, it would shrink to 800 million. Under Dole-Talmadge-McGovern, it will shrink to 600 million. So that is 40 percent less than the carryover in 1972, which will lead to shortages in the next 2 years.
With respect to feed grains, in 1972 the carryover was 2.1 billion. Under the current policy, today, it is 7.1 billion bushels.Under Dole, it would be 900 million, under Talmadge, 1.6 million. Under Dole-Talmadge-McGovern, that carryover would shrink to 300 million bushels, leaving us in 1979 with an 800 million carryover in wheat and a 300 million carryover in feedgrains, compared with a 1 billion and 2.1 billion in 1972, which appeared inadequate.
These are the figures that tempt many of us to believe that this bill, the Dole amendment, offers a very high, an unacceptably high risk of under-production, inadequate carryover, and the risk of really uncontrolled commodity prices if we have a bad year in the next year or two.
I yield back the remainder of my time.
Mr. DOLE. I yield back the remainder of my time.
The PRESIDING OFFICER (Mr. BUMPERS). All time has been yielded back.