Farm, Nutrition, and Bioenergy Act of 2007

Floor Speech

FARM, NUTRITION, AND BIOENERGY ACT OF 2007 -- (Senate - December 07, 2007)

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Ms. KLOBUCHAR. Mr. President, I first wish to acknowledge the great leadership of Senator Harkin and Senator Chambliss on this farm bill. I am proud to be a member of the Agriculture Committee and to be involved in this forward-looking farm bill. I also wish to thank the many authors we have on this amendment that I am going speak on today, including Senator Durbin and Senator Brown, both of whom were in here in the last few minutes.

This amendment includes some reasonable income eligibility limits for subsidies under the farm bill. The focus of this amendment is to make sure the subsidy and the safety net in the farm bill go to the people whom it will most help; that is, the family farmers of this country, not to real estate developers in Florida or art collectors in San Francisco. The focus is on family farmers throughout this country.

America's farm safety net was created during the Great Depression as an essential reform to help support rural communities and protect struggling family farmers from the financial shock of volatile weather and equally volatile commodity prices. Almost 75 years later, the reason for maintaining that strong safety net still exists.

The 2002 farm bill has spurred rural development by allowing farmers in Minnesota and across the country to take risks to expand production. Because of productivity gains and innovation, including advances in renewable energy, the farm support programs in the 2002 farm bill are projected to come in at $17 billion under budget.

So as we debate this current farm bill, as we will in the coming days, it is important not to underestimate the value of a strong bill to our country, to agriculture, to the rural communities throughout the Nation.

That is why, as a member of the Ag Committee, I strongly supported this farm bill and voted for it. It includes an increased focus, as the chairman mentioned, on energy, including cellulosic-based ethanol, continued support for a strong safety net, permanent disaster relief, so important to our farmers, and additional funds for conservation and nutrition.

Of particular importance, the country should know we balanced our budget in this bill, with every dollar of new spending fully offset. So there is a lot of good for Minnesota and the rest of the country in this farm bill.

There is, however, one critical area where I believe we can do some more reform; that is, to make sure the urban millionaires do not pocket the farm subsidies that are intended for our hard-working farmers. Here is a fact in my State. Minnesota is the sixth largest agricultural State in the Nation. Naturally, however, 60 farmers have collected more than $1 million each under the 2002 farm bill. None of those farmers are in my State.

The top 20 business recipients in the country have each gotten more than $3 million under this farm bill. Yet the average income of a farmer in Minnesota, after expenses, is $54,000. But under the current system, a part-time farmer can have an income as high as $2.5 million from outside sources and still qualify for Federal farm benefits.

I do not believe we should be handing out payments to multimillionaires, when these payments should be targeted to family farmers. Big payments to big-city investors threaten to undermine public support for the farm bill as a whole, even though people should know the commodity programs are projected to be just under 15 percent of the total farm budget over the next 5 years.

A poster boy for what needs to be changed is Maurice Wilder, the Florida-based developer who is the Nation's top recipient of farm payments--not conservation payments but commodity payments--for properties in five States, even though his net worth is estimated to be $500 million. This man is not a farmer. He is independently wealthy. He is a real estate developer, and he should not be getting Government checks. We have examples from all over the country of people who have been getting these checks, from David Letterman to Paul Allen.

But the problem doesn't stop with the extremely wealthy. Checks that are intended for farmers are being sent all over urban areas. Since enactment of the 2002 farm bill, $3.1 million in farm payments has gone to residents in the District of Columbia, $4.2 million to people living in Manhattan, and $1 million of taxpayer money under the farm bill of 2002 has gone to Beverly Hills 90210. Last time I checked there wasn't a lot of farmland in these communities. We can fix this problem and do better for our farmers by using the new farm bill to close loopholes, tighten payment limits, and enforce tougher income eligibility standards.

Again, I am a strong supporter of this farm bill. I believe the 2002 farm bill did some wonderful things for our country in terms of expanding production and revitalizing rural communities. What we want to do is build on the 2002 farm bill, fix some things, and make sure we go forward with a strong rural economy.

One thing was already fixed in the bill that came out of committee, and that is the three-entity rule. The current Senate and House--and this has actually gone through the House floor--proposals eliminate the three-entity rule. This will cut down abuse by applying payment limits strictly to individuals and married couples and ending the practice of dividing farms into multiple corporations so they can multiply payments. Second, as already mentioned by our chairman, the longstanding amendment proposed by Senators Dorgan and Grassley would limit annual payments under this bill. This amendment would also bring meaningful limits to the marketing loan program and close enormous loopholes that allow millions of dollars to flow to individual recipients under the current law. I support the Dorgan-Grassley amendment, and I urge my colleagues to do the same.

I believe a third kind of reform is also needed. Congress should act to prevent payments that are intended for hard-working family farmers from going to urban millionaires. We can do this by placing reasonable limits on the incomes of people and businesses that participate in the commodity program. Under current law, if you are not a full-time farmer, meaning that less than 75 percent of your income comes from farming, you are eligible to get commodity payments as long as your adjusted gross income is less than $2.5 million per year. This is part-time farmers under current law.

Let's figure out what that means. You can live in a city, have a job as an investment banker, make $2 million a year, and still get Government checks if you own shares in a farm. If you are a full-time farmer or farm corporation, meaning that more than 75 percent of your income comes from farming, under current law there is absolutely no limit on how much net profit you can have in a given year and still get farm payments. What we are talking about is, expenses are actually deducted for us to get to these numbers. Even with the expenses deducted, you can make, for part-time farmers, $2.5 million per year, and there is no limit for full-time farmers, and you are still eligible for these subsidies.

It also means mega farms that span entire counties can bring in untold millions in revenue and still get these kinds of payments. This flies in the face of common sense. It is against the intent of Congress and, along with two other amendments I support--one that is already in the bill, the Dorgan-Grassley amendment and this one--it will allow us to address these problems that have given rise to scandals that have already provided ammunition to those who say we should not have a farm bill. I believe we must have a farm bill. I have been pushing for this. I am glad we finally reached agreement on a total number of amendments so we can actually move forward with this farm bill next week.

I am offering this amendment, along with Senators Durbin, Brown, and many others, to place reasonable limits on the incomes of those who receive farm payments. Here is how the amendment works. If you are a full-time farmer, meaning that more than two-thirds of your income comes from farming, you can participate in the farm program, and you can get the subsidies, as long as your income after you deduct expenses does not exceed $750,000. If you are a part-time farmer or farm investor, and you have substantial sources of income off the farm, you can participate in farm programs if your income does not exceed $250,000. It is that simple.

I will note it is somewhat similar to some of the reforms the House enacted off the floor in their bill. Their amendment puts it at $1 million for a full-time farmer and then $500,000 of income for a part-time farmer. Right now the bill that came out of the Senate committee places no limits on the income of full-time farmers, and then places a limit on a part-time farmer at $750,000. What we are doing is trying to put the limits at $750,000 for a full-time farmer and $250,000 for a part-time farmer. This is better than the original proposal by the administration which sort of lumped part-time and full-time farmers together. This makes more sense, having talked to farmers in my State and across the country.

Some of my colleagues have said $750,000 is too low; that some farmers have a high cost of production and they need a higher income. Again, I remind my colleagues the income limit is applied after your farm expenses are deducted, including all your labor, your equipment, your fuel, and your fertilizer. We are talking about how much profit you have made at the end of the year.

If you own a farm that has netted $1 million in a single year after all your expenses are paid, I salute you. That is wonderful. There is nothing wrong with that. I would love it if every farmer in Minnesota had $1 million in the bank at the end of the year. But if they did, this amendment says they can't get the subsidy. But if you have received $750,000 in income, if you are a full-time farmer--$250,000 if you are part time--then you would be eligible.

Some of my colleagues have said the $750,000 limit on part-time farmers and nonfarmers is too low. If you live in the city and you own shares in a farm and you have a substantial source of income outside of farming that puts you over $250,000 a year, that is great for you. That is a

good thing. Lots of Americans would love to be in that position and have that problem. But they do not necessarily want to provide their tax dollars to give subsidies for these people who are living in Beverly Hills 90210 or New York and simply have investments. Vast Americans don't believe that is where farm subsidies should be going. They should be going to family farmers who make their income off farming, who are facing volatile weather and volatile prices that could basically put them under. We don't want to have that happen. Not only for the economy but also for our national security, we must have farming and we must have a strong agricultural sector.

In conclusion, the intent of this amendment is to strengthen the farm bill. All Americans have a vital stake in the fortunes of our farms and rural communities. Agriculture remains central to our Nation's economy, especially our prosperity in the global marketplace. That is why I support this farm bill, a basically national security bill. I intend to support it. I supported it out of committee, and I intend to support this legislation when it comes to a vote.

But it is not enough to have the support of just farm State Senators. I believe it is important to have the support of the entire country. We need this kind of reform because we need to have support from the entire country if we want to pass this bill. Inertia may be the most powerful force in the political universe, but after 75 years, the best interests of America's rural economy demand that we correct the abuses of the past so we can move forward to ensure a strong safety net for our hard-working farmers.

I urge my colleagues to support my amendment. I ask unanimous consent that the amendment be laid aside.

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Ms. KLOBUCHAR. Mr. President, if I could briefly respond to Senator Chambliss. I see my colleague from Idaho is here.

The ACTING PRESIDENT pro tempore. The Senator from Minnesota is recognized.

Ms. KLOBUCHAR. Mr. President, as Senator Chambliss said, we will be discussing this more in the week to come. I think Senator Chambliss and I agree that the last farm bill was successful for our country. People do not often realize when you read some of these reports in the paper that it came in $17 billion under budget. That money went back to the Government.

Also, we had a lot of success with that bill. I do not think that success stemmed from the fact that some of the scandals were occurring, with a million dollars going to Beverly Hills 90210 and some of these other places.

I appreciate the efforts we have made in the committee toward reform. As Senator Chambliss mentioned, getting rid of the three-entity rule was a very important step, also making some movement on the part-time farmers. To go to $750,000 for the income limit for part-time farmers is a very important step. What I am trying to do with this amendment, and my colleagues who support it are trying to do, is simply take a step further because we believe this money should be more targeted to family farmers.

Mr. President, as you know, as we discussed, this amendment does exclude expenses. When you are looking at the number $750,000 for full-time farmers, we are talking there about profit.

Even for a large farm, deducting all their expenses, $750,000 would be a very good year. So I believe if you look at this as a whole, people have to understand we are talking about profits and not expenses. The same with the part-time farmers. The definitions we use in this bill are similar to the ones that, in fact, the committee used to define expenses. So if it is good enough to define expenses for an agreed-upon committee standard at $750,000 for part-time farmers, then I believe if you look at going down to $250,000 in profits for part time, $750,000 for full time, the expense definition should be the same.

I also wanted to respond to the remarks about the USDA study on the AGI limits. My colleagues should understand that was based on the administration's proposal--that study, the President's proposal--which actually put part-time and full-time farmers at the same number, which was $200,000. Clearly, we have worked with our farmers, talked to them across the country. This amendment is different. It differentiates between the part-time farmer and the full-time farmer, understanding that they are in different positions. I would also note the USDA study found no regional bias in those who would be affected by this AGI limit.

So I believe as we go forward we have to keep in mind that those of us who support this amendment from States such as Minnesota and Illinois support a strong farm bill. We believe we have to have a strong safety net for our farmers, but the money shouldn't be going to Beverly Hills 90210 and it shouldn't be going to art collectors in San Francisco and it shouldn't be going to investment bankers in New York or to real estate developers in Florida. It should be targeted in a reasonable way to those who actually farm and to those part-time farmers who make a reasonable income, not to people who are making $1 million, $2 million, $3 million, $4 million a year. That is what this is about: making sure the safety net is there for those who need it.

By the way, if you have a large farm that has a bad year, and your profits go down, they could well qualify for the subsidies under that scenario. That is what we are talking about.

I wish to also add that the House bill that came off the House Floor does have some income limits. It has $1 million for a full-time farmer, $500,000 for a part-time farmer. We have no income limits for a full-time farmer in the existing Senate bill--no income limits at all. For a part-time farmer, our limits at $750,000 are significantly higher than the House bill.

So what my colleagues and I are trying to do with this bill is to get it in line so that it shows some actual reform of income limits--slightly lower than the House but still in the ballpark--so that we are actually doing some reform and not just giving lip service to it.

I appreciate the work of Senator Harkin and Senator Chambliss and the reforms we have made so far. I think we need to go a step further so we target the money on those family farmers and not urban multimillionaires.

Thank you very, Mr. President. I look forward to this debate as we go forward.

I yield the floor.

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