Table Of Content

S. HRG. 107–693 FISCAL YEAR 2003 FIELD HEARINGS HEARINGS BEFORETHE COMMITTEE ON THE BUDGET UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION January 8, 2002—THE FARM BILL January 20, 2002—IMPACT OF THE PRESIDENT’S 2003 BUDGET REQUEST ON HIGHWAY AND WATER INFRASTRUCTURE NEEDS January 22, 2002—THE PRESIDENT’S FISCAL YEAR 2003 BUDGET August 20, 2002—ASSESSING THE NEED FOR NATURAL DISASTER ASSISTANCE ( Printed for the use of the Committee on the Budget FISCAL YEAR 2003 FIELD HEARINGS S. HRG. 107–693 FISCAL YEAR 2003 FIELD HEARINGS HEARINGS BEFORETHE COMMITTEE ON THE BUDGET UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION January 8, 2002—THE FARM BILL January 20, 2002—IMPACT OF THE PRESIDENT’S 2003 BUDGET REQUEST ON HIGHWAY AND WATER INFRASTRUCTURE NEEDS January 22, 2002—THE PRESIDENT’S FISCAL YEAR 2003 BUDGET August 20, 2002—ASSESSING THE NEED FOR NATURAL DISASTER ASSISTANCE ( Printed for the use of the Committee on the Budget U.S. GOVERNMENT PRINTING OFFICE 81–882pdf WASHINGTON : 2002 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 COMMITTEE ON THE BUDGET KENT CONRAD, North Dakota, Chairman ERNEST F. HOLLINGS, South Carolina PETE V. DOMENICI, New Mexico PAUL S. SARBANES, Maryland CHARLES E. GRASSLEY, Iowa PATTY MURRAY, Washington DON NICKLES, Oklahoma RON WYDEN, Oregon PHIL GRAMM, Texas RUSSELL D. FEINGOLD, Wisconsin CHRISTOPHER S. BOND, Missouri TIM JOHNSON, South Dakota JUDD GREGG, New Hampshire ROBERT C. BYRD, West Virginia OLYMPIA J. SNOWE, Maine BILL NELSON, Florida BILL FRIST, Tennessee DEBBIE STABENOW, Michigan GORDON SMITH, Oregon HILLARY RODHAM CLINTON, New York WAYNE ALLARD, Colorado JON S. CORIZINE, New Jersey CHUCK HAGEL, Nebraska MARY ANN NAYLOR, Majority Staff Director G. WILLIAM HOAGLAND, Staff Director (II) C O N T E N T S HEARINGS Page January 8, 2002—The Farm Bill ............................................................................ 1 January 20, 2002—Impact of the President’s 2003 Budget Request on High- way and Water Infrastructure Needs ................................................................. 155 January 22, 2002—The President’s Fiscal Year 2003 Budget ............................. 257 August 20, 2002—Assessing the Need for Natural Disaster Assistance............. 321 STATEMENTS BY COMMITTEE MEMBERS Chairman Conrad ...................................................................................1..,. ..1..5..5..,. .2..5..7, 321 WITNESSES Aasmundstad, Eric, President North Dakota Farm Bureau ................................ 384 Bakke, JoNell, President Grand Forks Education Association ............................ 279 Ball, Robert, Colonel Corps of Engineers .............................................................. 181 Christiansen, Sue .................................................................................................... 56 Claymore, Duane, Standing Rock Sioux Tribe ...................................................... 401 Diederich, Paul, President of Industrial Builders Inc. and Vice Chairman of the Highway Divison of the Associated General Conractors of America .... 164 Dwyer, Mike, Executive Vice President North Dakota Water Users Associa- tion ........................................................................................................................ 204 Eichhorst, Ward ....................................................................................................... 63 Erlandson, Tim ........................................................................................................ 71 Froelich, Rodney, State Representative, District 35, State of North Dakota ..... 383 Hoeven, John, Governor of North Dakota ...........................................................2..1, 335 Isaak, Larry A., Chancellor of the North Dakota University System and President of the State Higher Education Executive Officers ........................... 262 Jamison, Warren, Manager Garrison Diversion Conservancy District ............... 185 Johnson, Mark, Executive Director of the North Dakota Association of Coun- ties ......................................................................................................................... 169 Johnson, Roger, Commissioner of Agriculture, State of North Dakota.............2..6, 345 Keller, Fred .............................................................................................................. 74 Kincaid, Tanna M., IT Supervisor for the North Dakota State Board of Voca- tional Education and Director of the North Dakota Teaching with Tech- nology Initiative ................................................................................................... 272 Kreitinger, Dean, Business Manager of Grand Forks Public School District Number 1 and Grand Forks Air Force Base School District Number 140 ...... 308 Monson, Roger D., President, Citizens State Bank, Finley, ND.......................... 39 Moser, Wade, Executive Director North Dakota Stockman’s Association .......... 397 Nielson, Bev, Assistant to the Executive Director of the North Dakota School Boards Association ............................................................................................... 287 O’Keeffe, Michael, President and Chief Executive Officer of Farm Credit Services ................................................................................................................. 45 Olson, Jay, Adult Farm Management Instructor, Lake Region State College ... 393 Pomeroy, Earl, Congressman for the State of North Dakota.............................1..1, 328 Sanstead, Wayne G., North Dakota Superintendent of Public Instruction ........ 257 Schlosser, Richard, Vice President North Dakota Farmers Union...................... 389 Sprynczynatyk, Dave, Director of the North Dakota Department of Transpor- tation ..................................................................................................................... 158 Stewart, Dan ............................................................................................................ 77 ADDITIONAL MATERIALS AND CHARTS SUBMITTED Statements: .............................................................................................................. Belford, Joe, Ramsey County Commissioner and Chair of the Lake Emergency Management Committee ..................................................................................... 223 iii Page Broten, Jim, Chairman, North Dakota Barley Council ........................................ 95 Davis, Daniel, Field Engineer................................................................................. 227 Fisher, Wayne, Farmer and Dakota Resource Council member .......................... 146 Gage, Mark, Farmer-North Dakota Grain Growers Association ......................... 139 Halfmann, Craig, President, Red River Valley Sugarbeet Growers Association 103 Hall, Tex G., Chairman, Mandan, Kidatsa and Arikara Nation ......................... 229 Hondl, Jimmy, Farmer, Rancher and Dakota Resource Council member .......... 150 Hushka, Niles, PE, Vice President Kadrmas Lee and Jackson ........................... 228 Johnson, Greg, President, North Dakota Dry Pea and Lentil Association ......... 104 Klein, Lloyd, President of the National Sunflower Association ........................... 101 Leinen, Jeff, Vice President North Dakota Soybean Growers Association ......... 134 Long, John ................................................................................................................ 136 Maier, Jen, President, North Dakota Reading Association .................................. 313 Martinson, Jon, Executive Director, North Dakota School Boards Association . 316 Murphy, Charles, Chairman Standing Rock Sioux Tribe..................................... 225 Nelson, Donny, Rancher .......................................................................................... 89 North Dakota Farm Bureau ................................................................................... 128 Pfliger, Burton, President North Dakota Lamb and Wool Producers ................. 112 Pollestad, Steve, Farmer, Rancher and Dakota Resource Council member ....... 143 Rauser, Linda, Farmer, Rancher and Dakota Resource Council chair ............... 91 Senechal, Myron P., Director Northern Plains Soil and Water Conservation Society ................................................................................................................... 99 Sprynczynatyk, Connie, Executive Director North Dakota Leaque of Cities ..... 221 Sprynczynatyk, David, PE, Director ...................................................................... 231 USA Dry Pea and Lentil Council ........................................................................... 106 Testimony, charts, and graphics submitted by a various parties througout the State of North Dakota ................................................................................... 412 iv THE FARM BILL TUESDAY, JANUARY 8, 2002 U.S. SENATE, COMMITTEE ON THE BUDGET, Bismarck, ND The committee met, pursuant to notice, at 9 a.m., in the Civic Center, Room 101, Bismarck, North Dakota, Hon. Kent Conrad (chairman of the committee) presiding. Present: Senator Conrad. OPENING STATEMENT OF SENATOR CONRAD Chairman CONRAD. Welcome. Good to have you here this morn- ing. This is an official hearing of the Senate Budget Committee on the question of a new farm bill. This is critically important that we address this question because the farm bill is still pending before the United States Senate and upon our return we must conclude action. We must conclude action by April 15th or lose the funding that was in the last budget reso- lution. That is $73.5 billion of funding over and above the so-called baseline which would be the funding available under the previous farm bill. I think you can see without that additional funding there would be no way of writing any kind of decent farm legislation. In fact, what we would be stuck with is the status quo minus the disaster assistance payments we have received each of the last 4 years. Those payments have totaled more than $25 billion of disaster assistance payments. They were necessary because of the fail- ure of the current farm legislation. In fact, I believe the current farm law itself is a disaster. I don’t know why else we would have had to write disaster assistance bills, economic disaster assistance bills for agriculture each of the last 4 years. I think all of us know what the consequences would have been if we had not had that disaster assistance in place for North Dakota and other farm States. Can you imagine what would have happened without those economic disaster assistance payments each of the last 4 years? There truly would have been a race to the auctioneer. The reason this hearing is important is we must establish a record before the Senate Budget Committee that has responsibility for identifying the budget needs of the Country as they address the budget for the year 2003. Let me just move, if I can, to the charts to try to make this case clear in a visual way as well. The first and, I think, most dramatic reason that we need a new farm bill is that we have got prices that farmers received at a 50- to 60-year low. In real terms, adjusted (1) 2 for inflation, the prices farmers are receiving are the lowest they have been in 50 or 60 years. This chart shows the relationship between the prices that farmers pay—that is the green line—and the prices that farmers receive—that is the red line—and what you can see is the last time that they were even close was before the last farm bill was written. You will recall at that time we were assured of permanently high farm prices. Now, that promise was good for about 90 days, and then as you can see, farm prices started col- lapsing even while the prices that farmers paid for all of the inputs continued to increase. The result is a chasm between the prices that farmers receive and the prices that they pay for all of the goods that they must buy. That is, I believe, the first and most important reason for us to write a new farm bill to deal with this disparity. Second, I want to indicate the October price index that indicates the prices that farmers receive showed the biggest monthly decline since they started keeping records 91 years ago. Farm prices de- clined in the month of October by nearly 10 percent. It is a second key reason we need to act on new farm legislation and act now. An additional reason is what our major competitors are doing. Our major competitors are the Europeans. They are giving much higher levels of support to their producers than we are giving to ours. Let me just show the difference. This is the European Union. The level of support they provide their farmers each year, it averages over $300 an acre. This is what we provide our farmers, $38. So we are being outdone here almost 10 to 1. It is no wonder our farmers are in a very difficult circumstance. But it doesn’t end there because if we look at world agricultural export subsidy we see a similar and even more dramatic pattern. This chart shows that the European Union is flood- ing the world with agricultural export subsidy. You can see that the blue part of this pie is what Europe is doing to support their producers. They account for 84 percent of all the world’s agricultural export subsidy. This is the United States’ share, this little red piece here, 2.7 percent. So we are being outgunned there nearly 30 to 1. In fact, something more than 30 to 1, it is no wonder our producers are facing difficult economic times. Now, the consequence of all of this is demonstrated in this chart, it shows North Dakota net farm income excluding Government payments. Now, this should sober anybody who takes the time to look. If we go back to 1991 through 1996 you can see we were getting substantial income without Government support. That is, before Government support was included, there was substantial net farm income in North Dakota. But with the passage of the last farm bill, the collapse in prices, you can see farm income without Govern- ment payments evaporate. In the most recent year for which we have full records—the year of 2000–2001 is not yet completely com- piled—there would have been no net farm income, none in the State of North Dakota without Government payments. That is the harsh reality that we must confront. Maybe we can go to these next charts and talk about where we are now with the new farm bill. First of all, as all of you know, the House has taken action; they have written a new farm bill. It is a good effort, it is a good begin- 3 ning but it could be improved on. It could be improved on because, first of all, when they wrote the farm bill in the House of Rep- resentatives, they took very good care of the South because it was written by a chairman and a ranking member of the House Agri- culture Committee who happened to be from Texas, and they took very good care of Southern agriculture. They didn’t take very good care of the Northern Plains. In fact, we came in, by various calcula- tions, third to last in the United States, second to last, somewhere in there, in terms of the additional money going to agriculture under the budget commitment that was made. That is not accept- able. We shouldn’t be second to last or third to last or dead last. There ought to be a fair sharing of the new resources. When we look at the farm bill comparison, in the House they don’t have higher loan rates, higher marketing loan rates for wheat, feed grains, et cetera. The House doesn’t have it, the Senate does. The all-barley loan rate, the House doesn’t have it, the Sen- ate does. The loan rate for oilseeds is substantially lower in the House bill than in the Senate bill. Marketing loan for pulse crops is critically important to those who want to diversify, and what we see is that there is no provision in the House bill, none. In the Sen- ate bill, there is coverage for the pulse crops. And then the repeal of the sugar loan forfeiture penalty, no provision in the House bill, it is covered in the Senate bill. We also see a difference between the two bills in terms of their effect on commodity program funding. We see in the Senate bill nearly $2 billion more for the commodity programs than we see in the House bill. That is critically important, obviously, when we go to conference to try to rectify the weaknesses in the House bill with respect to the Northern Great Plains. If we are going to get a better deal for our part of the country, you have simply got to have additional resources so that we have leverage in the negotiations. We have heard a lot and the Eastern media is making much of the disparity in the farm bill with respect to where the money goes, and they emphasize the very large payments that are made to some producers. There is no question there is a problem with this. Many of us believe and have long supported reasonable payment limitations, but I must say the Eastern media in many ways has misrepresented the full picture. They have not put it in context because what you find, if you study this issue, is that the vast majority of farms in the United States are hobby farms. They are very small farms that really aren’t farming operations at all; they are weekend operations. They are people who live in town who are not dependent for their livelihood on the farm. And so of the 2.2 million farms that are cited, really only 350,000 of them have more than $100,000 of gross receipts. Now, let me make this very clear. I am not talking about gross income. I am talking about gross receipts of at least $100,000. There are only 350,000 farms in this country with gross receipts of over $100,000. That is really where we have to look when we write farm policy because that accounts for 80 percent of all the food products that are produced in this country. So I have done this chart to try to emphasize and show the difference between—this mic is not much better than the other one. 4 We are going to go to No. 3. OK. How about this one? This one work? Hey, third time is the charm. I think this is a very important piece of information. The red bar shows what is happening in terms of the number of farms. The yel- low bar shows the amount of production coming from those farms. The green bar shows the amount of Government support. And what you see is very clear, the retirement or hobby farms, there are a very large number of them. They produce very little. They actually get more Government support than their production would dictate. In the small commercial farms, you can see that there is a rough balance between the number, the amount of production they have and the amount of Government support they receive. In fact, again, in that category they receive more Government support than their production would dictate. And then the large commercial farms, those are the ones that really are producing the vast majority of what is produced agriculturally in America. You can see they account for 80 percent of all the agricultural production, much small- er in numbers, and they actually get less Government support than the production they provide would indicate. I hope this puts the question in some context here so that we un- derstand what is really happening with respect to Government payments as relates to production. Those who produce the most get the most in Government payments. That is the way the farm program works. Those who produce almost nothing don’t get much in the way of Government support and they don’t produce much. I mean, that is the reality. So I hope that point is clear. Let me indicate that I hope today we are able to lay out in the record in a way that is clear and convincing the need for a new farm program and that we are able to make the case that will stand up in the weeks and months ahead why it is critically important for this country, not just the rural parts of this country but to the entire country, why a new farm bill is critically important and in this Nation’s interest. [The prepared statement of Chairman Conrad follows:]