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Hearing Before the Joint Economic Committee Congress of the United States Ninety-Ninth Congress

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Hearing Before the Joint Economic Committee Congress of the United States Ninety-Ninth Congress \3S 4 S. HRG. 99-545 THE SPREADING IMPACT OF THE FARM CRISIS HEARING BEFORE THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-NINTH CONGRESS FIRST SESSION SEPTEMBER 19, 1985 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 5S-046 0 WASHINGTON: 1986 JOINT ECONOMIC COMMITTEE [Created pursuant to sec. 5(a) of Public Law 304, 79th Congress] HOUSE OF REPRESENTATIVES SENATE DAVID R. OBEY, Wisconsin, Chairman JAMES ABDNOR, South Dakota, LEE H. HAMILTON, Indiana Vice Chairman PARREN J. MITCHELL, Maryland WILLIAM V. ROTH, JR., Delaware AUGUSTUS F. HAWKINS, California STEVEN D. SYMMS, Idaho JAMES H. SCHEUER, New York MACK MATTINGLY, Georgia FORTNEY H. (PETE) STARK, California ALFONSE M. D'AMATO, New York CHALMERS P. WYLIE, Ohio PETE WILSON, California DANIEL E. LUNGREN, California LLOYD BENTSEN, Texas OLYMPIA J. SNOWE, Maine WILLIAM PROXMIRE, Wisconsin BOBBI FIEDLER, California EDWARD M. KENNEDY, Massachusetts PAUL S. SARBANES, Maryland ScoTT LILLY, Executive Director ROBERT J. TosMRuD, Deputy Director (II) For sale by the Superintendent of Documents, Congressional Sales Office US. Government Printing Office, Washington, DC 20402 CONTENTS WITNESSES AND STATEMENTS THURSDAY, SEPTEMBER 19, 1985 Page Obey, Hon. David R., chairman of the Joint Economic Committee: Opening statement....................................................................................................................... 1 Schwinden, Hon. Ted, Governor, State of Montana .................................................. 5 Clinton, Hon. Bill, Governor, State of Arkansas ....................................................... 24 Janklow, Hon. William, Governor, State of South Dakota ...................................... 37 Pryor, Earl, small grains and livestock producer, Condon, OR, and former president, National Association of Wheat Growers ............................................... 55 Luchterhand, Bryce, dairy farmer, Unity, WI ........................................................... 211 Tubbs, Alan, president, First Central State Bank, DeWitt, IA, on behalf of the American Bankers Association .............................................................. 213 Randall, Dean, executive director, South Dakota Retailers Association, Pierre, SD.232 Testolin, Nedalyn D., livestock producer, chairman, Platte County School District No. 1, and executive director, Wyoming Rural Support Network ....... 234 Heffernan, William D., professor of rural sociology, University of Missouri- Columbia ............................................................... 256 Moore, L. Calvin, vice president, Oil, Chemical & Atomic Workers Interna- tional Union, AFL-CIO .............................................................. 283 SUBMISSIONS FOR THE RECORD THURSDAY, SEPTEMBER 19, 1985 Abdnor, Hon. James: Written opening statement ..................................................... 3 Clinton, Hon. Bill: Prepared statement....................................................................... 28 D'Amato, Hon. Alfonse M.: Written opening statement .......................................... 48 Heffernan, William D.: Prepared statement............................................................... 264 Moore, L. Calvin: Prepared statement......................................................................... 287 Pryor, Earl: Prepared statement, together with additional material for the record.............................................................................................................................. 58 Schwinden, Hon. Ted: Prepared statement, together with additional material for the record................................................................................................................ 8 Testolin, Nedalyn D.: Prepared statement.................................................................. 237 Tubbs, Alan: Prepared statement................................................................................. 216 APPENDIX Earl, Hon. Anthony S., Governor, State of Wisconsin: Statement of .................... 299 (III) THE SPREADING IMPACT OF THE FARM CRISIS THURSDAY, SEPTEMBER 19, 1985 CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, DC. The committee met, pursuant to notice, at 10 a.m., in room 210, Cannon House Office Building, Hon. David R. Obey (chairman of the committee) presiding. Present: Representatives Obey and Snowe; and Senators Matting- ly and D'Amato. Also present: Robert J. Tosterud, deputy director; and Dena Stoner and Dale Jahr, professional staff members. OPENING STATEMENT OF REPRESENTATIVE OBEY, CHAIRMAN Representative OBEY. Good morning. Last February, this committee held a hearing to hear reports on the farm credit crisis from the State legislators representing 10 Farm Belt States. Those reports included sobering testimony about the extremely difficult situation farmers were facing in trying to make ends meet, stay in business, or just hang on to their farms. In the 7 months since that February hearing, despite what we have heard about the overall national economic recovery, the farm economy has gone from bad to worse. For example, net farm income is now expected to drop this year by almost 40 percent, while farm production costs are still increasing. That means that many more farmers are going to be squeezed tighter and tighter. That has significant implications not just for the farming commu- nity but for the rural community as well. We are convening another hearing this morning at a time when there is clearly an economic crisis in rural America as it relates to agriculture. But this. crisis is not just ravaging farmers, it's spread- ing far beyond that. It is affecting small rural banks and the entire farm credit system, agriculture-related business and main street shops, farm equipment and machinery suppliers, and workers in the factories who build that equipment. It affects local schools in their ability to maintain local tax sup- port for their school systems in the face of extreme economic diffi- culty. And it is taking a terribly heavy toll in human terms on mil- lions of people in rural America. We are holding this hearing at the same time that the Congress is about to begin debate on the 1985 farm bill. In fact, immediately after this hearing is concluded, I have to go to the Rules Commit- tee to testify on amendments that a number of us will be offering to the farm bill when it hits the floor. (1) 2 The House debate will begin on that bill on Friday and continue on next week. That debate is likely to be contentious, to put it po- litely. I hope it will also be an informed debate. One of the problems, frankly, that a number of us from rural areas face is that farm programs are complicated, and farm prob- lems are complicated. If you live in the kind of a district which does not share those problems, it is very difficult to understand the complexity, much less the implications of farm and credit policy in rural America. One of the reasons for this hearing this morning is to try to in- crease our ability to convey to people from urban districts in this country, perhaps not an intricate understanding of farm problems and the problems of rural America in a technical sense, but cer- tainly we would like to increase the understanding that urban America has about the human, economic, sociological problems being faced by rural America which are really every bit as impor- tant to this country as the numbers which mask them. Unfortunately, the shape of the debate is largely being deter- mined by an attitude which I think Secretary Block expressed most clearly when he indicated that the policy of deregulating agricul- ture is likely to hurt farmers, decrease food supplies, and increase prices. But that is a small price to pay for saving the U.S. agricul- tural industry. Archie noted once that it is very easy to find comfort in time of trouble, when the trouble is somebody else's trouble. I think all too often that is what we do. It is very easy to urge someone else to exercise discipline, even while we don't do it our- selves. We certainly have that example at the Federal level on the budget deficit question. It is often easy to ask someone else to endure economic pain and social pain, if that pain is not ours to bear. What I am anxious to do this morning is to hear from three gen- tlemen on the first panel who represent States who have serious problems in the farming community. We will be then hearing from another panel which will describe in more detail what is happening in human terms in areas that they deal with every day. I do want to do one thing. I want to insert at the end of my remarks, a copy of the opening statement that vice chairman, Senator James Abdnor would have made had he been able to be here. We scheduled this hearing at a time when both of us had clear schedules. But as a member of the House Ap- propriations Committee, I can fully appreciate his problem because he serves on the Senate Appropriations Subcommittee on Agricul- ture. He was greeted yesterday by a sudden meeting of that com- mittee, the markup of their bill, which obviously requires his atten- tion there this morning, because it is dealing with real dollars. I wanted to put his statement in the record and indicate that he shares our concern about the problems we will be discussing. [The written opening statement of Senator Abdnor follows:] 3 WRITTEN OPENING STATEMENT OF SENATOR ABDNOR, VICE CHAIRMAN IT IS A PLEASURE FOR ME TO EXTEND A WARM WELCOME TO OUR DISTINGUISHED WITNESSES,
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