“They will bring up payment limitations again,” Stenholm told a group of Texas cotton ginners recently in Lubbock.
The Plains Cotton Ginners Association, at a breakfast prior to their annual meeting, honored Stenholm, ranking member of the House Agriculture Committee, recognizing his contributions to what most consider a favorable farm law.
Stenholm wished he had better news.
“Things could get interesting,” he said, “as we begin work on an appropriations bill. Payment limitations will be an issue and we know what that will do to the cotton industry.”
Stenholm said his “good friend Senator Grassley” doesn’t understand what payment limitations would do to Southern agriculture. “We will continue to agree to disagree,” he said.
A key factor will be the state of the economy when Congress takes up the appropriations debate. “I wish we had already passed ag appropriation legislation,” Stenholm said.
He said the prolonged drought that has scorched much of the Midwest this summer and severely reduced grain and soybean yield potential makes the situation even more precarious. Agriculture needs disaster assistance, he said, for both 2001 and 2002 crops.
“We will make an effort to provide drought assistance,” he said, “but that will be difficult without re-opening the farm bill,” which could expose payment limitations again. Also, the Bush administration has insisted that any disaster funding come from money earmarked for the Farm Security and Rural Investment Act of 2002, not from new funds.
“We have to proceed with caution.”
Stenholm said Grassley’s approach to improving farm efficiency flies in the face of reality for Southern farmers, as well as for many Corn Belt producers.
“Farms have gotten more efficient by adopting technology and getting bigger,” he said. “Now, Senator Grassley and others say big is bad. They contend that getting smaller will improve efficiency.”
That mindset ignores the basic economic principal of economy of scale. It’s a short-term approach to an industry that must look years into the future, the Congressman said.
“Corporate America could learn a few things from agriculture,” he said. “Corporate decisions in the past few years have been based on the next quarterly report. They have no long-term outlook.”
That thinking, he said, created a situation that encouraged chief operating officers to “raise their own salaries to obscene levels. Has anyone earned 500 times the salary that those who work for him earn?” he asked.
Farmers, on the other hand, always look to the future, “because the short-term is always so bleak. They don’t buy land on a short-term outlook.”
Stenholm said Congress also needs to revisit crop insurance legislation. The drought in the Midwest underlines the inequities in the program. “Nebraska has not had a drought for the past five years. They have no history of low yields, yet farmers find crop insurance inadequate to cover their losses.”
He said if coverage is not adequate for the Midwest, even with a consistent yield history, something is wrong with the system. “It’s certainly not being administered the way Congress intended. We tried to make it so it could be handled privately, but that has not worked.”
Stenholm praised the recently passed Trade Promotion Act, giving the President more leeway to negotiate trade agreements.
“A lot of farmers have expressed concern about this legislation,” he said, but now our trade representatives can sit down and negotiate for a level playing field. We have to participate in the process. Losses we’ve suffered in the textile industry resulted from our failure to negotiate.”
Stenholm said negotiators “always work better from a position of strength. And we must be willing to walk away from the table.”
He said his current understanding is that agriculture will play a key role in the process. “We have been told before that agriculture would be protected, only to have it sacrificed,” he said. “The program we have in place now is a good one. I don’t think I could have written a better proposal myself. We had more input into this program than we have had before.”
He said the strong dollar continues to erode the U.S. farmer’s ability to trade. “That one factor prices our products 40 percent higher than our competition. I’ve had a bellyful of the European Union and the media criticizing our farm program for subsidizing farmers. That’s why we needed TPA. I wanted it for President Clinton and I wanted it for President Bush. It’s the only way to do away with the trade negatives.”