July 12, 1978
Page 20392
Mr. MUSKIE. Mr. President, I would like to commend the committee for including in this bill a provision that would establish a national commission on the effects of markets on farm income.
I share the committee's caution in creating a new commission. However, in this case I believe one is justified. First of all, the commission will address an issue that has been of great concern to Maine potato farmers and other agricultural producers throughout the country. Second, the bill would require that at least four members of the commission be agricultural producers. This kind of direct participation by farmers will enhance the credibility of the findings of the commission and could not be accomplished were an existing agency, such as the General Accounting Office, to undertake the study.
Many Maine farmers have for years said that futures trading has been subject to manipulation and does not accurately reflect actual supply and demand.
Distrust of the futures market has been fueled by a 1976 contract default and by depressed prices.
The majority of Maine potato farmers are persuaded futures trading does not serve their best interests.
They have expressed their wish through the Maine Potato Council. I support the position of the Maine farmers and have cosponsored legislation to eliminate trading of potato futures. I continue to hope that legislation will be considered at an early date.
The commission established by this bill would provide a useful vehicle to examine this issue. All parties stand to benefit from a thorough and enlightened review.
So I am pleased to support this bill and particularly the study provision.
Let me add that I believe it would be useful for the commission to conduct field hearings during its investigation.
I know Maine farmers would welcome the opportunity to express their views directly on the question of futures trading.
Mr. HATHAWAY. Mr. President, I commend the Agriculture Committee and the floor manager of the Commodity Futures Trading Commission reauthorization bill for their labors in what has often been an area of great controversy.
In May of 1976, the default in clearing of contracts for future delivery of Maine potatoes on the New York Mercantile Exchange sent shock waves through the potato industry. Many investors lost large sums of money and confidence in the futures market for potatoes plummeted both among the general public and in the farm community as well.
Since that time, the debate within the farm community has continued nearly unabated. Because of suspicion about the invalidity of the potatoes futures market, charges that the Department of Agriculture's Statistical Reporting Service figures on potato stocks-on-hand are inaccurate have also been made.
Behind these charges and these suspicions is the inescapable fact that potato farming is increasingly expensive; but the rewards have not kept up with the costs.
The degree of indebtedness is much greater than it was not so many years ago. But a farmer must have pesticides, fertilizer, and certified seed if he is to obtain sufficient production and compete. Crop loans are necessary to secure those necessaries.
A higher debt level, of course, puts the farmer in a more vulnerable position when a bad year comes along.
This past year has been bad for farmers in Maine. I have introduced legislation to raise tariffs on Canadian potatoes, and I introduced a bill to establish a set aside program for potatoes — both bills because the situation demanded such drastic responses to intolerable hardships for Maine farmers.
I have cosponsored Senator CHURCH's bill to end trading in potato futures and I look forward to hearings on this matter.
For the same reason, I commend the Senate Agriculture Committee for its establishment, in this bill, of the National Commission on the Effects of Futures Markets on Farm Income.
This Commission will study and appraise the relationships between the prices established on futures markets and the cash prices of the commodities. It will examine the extent of foreign trading. It will look into the prices received by American farmers and the prices received by others handling those commodities on exchanges.
All in all, such a study should be of tremendous help in outlining exactly where and how the present system hurts farmers and what might be done to correct abuses and inequitable practices where they do exist.
I very much hope that the Commission, in consideration of the grave events which have befallen the Maine potato industry in recent years, will make it a priority object of study, report, and recommendations for action.
Mr. LEAHY. I thank the Senators from Maine (Mr. MUSKIE and Mr. HATHAWAY) for their comments.
I believe it would be very appropriate for the Commission to hold field hearings.
I know the farmers in Maine have expressed concern about futures trading and I believe they and other farmers, should have the opportunity to testify before the Commission.