Lugar Floor Statement on the Farm Bill Conference Report
May 7, 2002

(The following is a transcript of Sen. Lugar’s remarks on the Senate floor.)

The Senator from Indiana is recognized.

Mr. LUGAR. Madam President, I yield myself as much time as I may require.

Madam President, let me commence by thanking our distinguished chairman, Senator Harkin, for his leadership. It is not an easy task to be chairman of a committee during a farm bill consideration, given all of the requirements for equity and forethought throughout America. Equally, the chairman of the House committee and the ranking member, Mr. Combest and Mr. Stenholm, have guided a very large committee for its consideration and an equally complex conference.

Those who have served on the staffs of both the majority and minority, in both Houses, have given extraordinary service in the past few weeks. Sometimes they alone, really, have understood how comprehensive and how complex this issue is, and they have been extraordinarily helpful to Members, members of the press, and other constituent groups.

This bill comes to the floor with an extraordinary amount of work and devotion by persons who have strong motives and strong ideals. Let me point out, as I have during the debate in committee as well as on the floor, very strong achievements have occurred. The chairman has outlined a number of these in the areas of conservation and rural development and research and nutrition and energy. In the Senate committee and in our bill on the floor, Members included those items with a great deal more strength and money than our House colleagues.

One of the predicaments from the beginning was that our bill, as it left the Senate floor, as it turned out, cost $6 billion more than the limits. So immediately a scaling back of those items in which there was strong bipartisan support had to occur, and further scaling back occurred as we tried to reach a compromise with House colleagues, who were much more focused on the commodity sections of the legislation.

Let me outline the arguments I am going to make this morning and then return to fill in the details that I think would be helpful to Senators as they consider their vote on this conference report.

I start with the thought that the Senate, in a very real sense, is a board of directors that has governing responsibilities for our country. Our responsibilities are broader than a corporate board and deal with the economic and humanitarian concerns of private firms. We really have a trusteeship regarding the funds, the security, and continuity of our country. Each of us takes that seriously. And each of our votes on this farm bill conference report we know must withstand the scrutiny of history. This is not a temporary bill; it is one of many in a long saga of developing farm bills, but it will have ramifications for millions of Americans.

Second, most Senators--perhaps all of us--take very seriously the obligations we have as a part of that trusteeship to the Social Security trust fund and to the Medicare trust fund. From time to time, we have vowed merely to protect the importance of the so-called lockbox idea; namely, that these very important social funds and safety net funds for all Americans must be protected.

That enters into this consideration because, very clearly, as this debate has continued, the estimates of the Federal deficit for the fiscal year in which we are now have grown to $100 billion. Pessimists believe the deficit for the fiscal year that ends September 30 may in fact be more than $100 billion. That means we are having this debate after a time in which there were budgetary assumptions--well over a year ago--that our country would have a surplus this year, in terms of our current accounts, and throughout many years. In fact, in the euphoria of those days, $3 trillion was often mentioned in discussions of a surplus, giving ample room to Social Security reform, Medicare reform, and such items as the farm bill. But those times are gone, and the cost of the farm bill still continues to rise with each subsequent estimate by the Congressional Budget Office or by others.

I mean specifically that even as we completed our work in the Senate and believed that on a 10-year basis we were adding $73.5 billion of additional spending, in fact the Senate farm bill cost $6 billion more than we had been allotted by the Senate Budget Committee.

Just yesterday--the Congressional Budget Office wrote to our chairman, Senator Harkin, indicating that, sadly enough, the conference report that we thought comprised $73.5 billion of spending in addition to the current baseline is, as a matter fact, $9.5 billion over what the Budget Committee allocated for additional spending. In short, this argument we have been having about holding spending below $73.5 billion is now rendered moot by the fact that, based on the most recent CBO estimates, we are talking about $82.8 billion.

The Congressional Budget Office does not leave us in doubt as to what has occurred. It says essentially that the increase stems primarily from our current assumptions that prices for many commodities will be lower in 2003 and beyond than they had assumed just last year.

But, in fact, I will argue in due course that it is very probable that prices will go lower still, that the effect of this farm bill is an inevitable vast oversupply of agricultural commodities and lower prices. Therefore, given the technical way in which the bill has been put together, we are almost bound to have increasing costs for the bill each year for the duration of the farm bill.

Some would say that should this spending lead to humanitarian aspects for all Americans--better nutrition--better conservation of our natural resources, breakthroughs in terms of our energy dilemmas, opportunities for young farmers to come into agriculture--that these are important expenditures. And, as trustees for our national wealth, we have to balance them with Social Security and Medicare.

Of course, overhanging all of this discussion, since September 11 and our nation being at war, there are vastly increased financial demands regarding our national security and homeland defense.

But the moneys that are involved in this farm bill do not primarily go to considerations of conservation, nutrition, energy, and development of rural communities. This conference report costs an additional $82.891 billion on a 10 year basis. That is an increase of almost $9.5 billion since we finished the conference report. Of that $82.8 billion, $56.7 billion goes to the commodity programs--title I. That is roughly 70 percent of all of the spending. A specific area of commodity programs has almost all the additional money added to it; namely, the so-called program crops. It came out of conference at $41 billion, and it is now about $49.5 billion. That is where the money is, and that is where the increases are occurring because of lower price estimates and policies that are almost guaranteed to lower the prices more.

If this large expenditure for commodity prices were going in some equitable way to farmers throughout America this might be somewhat tolerable. It is estimated that there are roughly 2 million persons in agriculture, using a definition that each entity which has $1,000 of agricultural income is certified as a farmer. In our debates, we have noted that perhaps of these 2 million farmers, approximately 150,000 produce as much as 80 percent of the value of all agricultural commodities produced.

I am not here to debate about the structure or definition of agriculture. But a lot of the rhetoric that has accompanied this bill and previous farm bills revolves around trying to save the small family farmer, or even the medium-sized family farmer, or even the very large family farmer. In fact, two-thirds of the payments under this program crop section--$49.5 billion on a 10-year basis--are going to go to 10 percent of farmers who are in the commodity row crop business. That is a minority of the farmers in America about whom we are talking. Only 40 percent of farmers, in fact, are going to be involved in producing program crops. Sixty percent of farmers are not in that ball game at all.

So when we talk about $49.5 billion going to program crops, we are talking about 40 percent of farmers, and we are talking about the fact that two-thirds of the money goes to 10 percent of the farmers.

Any way you look at it, this is a highly concentrated system of payments. It is not new. We did not just discover this. The evidence was very clear, as conferees looked at the figures of the past, even as they projected these payments into the future.

Therefore--and here there are winners and losers--if you are now a landowner in America, it is highly probable that your land will increase in value. Why? Because with some predictability, as the chairman pointed out, with some degree of certainty, you can count upon receiving substantially more money. If you own the land, that will be of benefit to your banker if, in fact, you borrowed to put the crop in--the banker having some certainty that the collateral, namely, the land behind the loan, will be worth more year by year.

If you are one of 42 percent of farmers in this country who rent land as opposed to owning land, you face a very tough set of circumstances. Your rents are very likely to go up each year as the value of the land goes up. Worse still, if you are a young farmer who
hopes someday to own land, then your prospects of getting the money to do that, and being able to pay the price, of course, diminishes year by year. And that has been occurring in America. As a result, there are young farmers who are in farm families who are hopeful that with the reduction or, hopefully, the repeal of Federal estate taxes, that they might inherit the land. Others who are not in such situations are likely to be out of luck. So as a result, it is predictable that the average age of farmers in this country will continue to increase, as it has been increasing in recent decades. That contributes, in part, to the consolidation in farm ownership.

In spite of all of the rhetoric and all of the attempts to talk about perpetuating the small family farm, or the medium or even the large farms, the facts are, that consolidation is increasing, and this bill will increase it by leaps and bounds.

Some have pointed out--I heard this in the conference committee--we are not discussing a welfare bill, we are not talking about everybody's plight. We are talking about agricultural policy principally for those who have some power and authority in America now and who have expressed that through farm organizations and commodity groups. Their voices have been heard, and their views are reflected in this conference report.

Word of all of this has gone abroad. Our world trading partners are already outraged. Some members of the conference have already dismissed this and said, essentially, that is simply too bad, what we are talking about are American farmers, not European farmers or South American farmers or Australian or New Zealand farmers. We are talking about Americans who need this money and need it in a hurry. They have simply indicated that already we are discriminated against by countries abroad and blocked at almost every turn as we try to export more; and, therefore, if the rest of the world is outraged, so be it.

I understand that feeling and the frustration that each one of us has in seeing the lack of success that our trade negotiators have had in recent years in this administration and the last. That frustration is very great. But it does not hide the fact we have to be successful in exporting much more agricultural produce into this world, or the surpluses that we build in this farm bill will come up around our necks with much greater tragedy not only for farm families but, I believe, for the American people as the cost of this bill continues to rise and prices continue to fall.

Perhaps worse still, I believe a pattern has been perpetuated in the consideration of this farm bill that is very serious for this body and for the American people to consider. Essentially, this bill is largely an attempt to respond politically to deeply felt economic issues in specific States and districts. It is an attempt, in a very closely divided Congress, to try to think through individual situations of Senators and Members of the House, with the thought that party control of either body may be a much more important objective than careful economic analysis or maybe even careful stewardship of the funds for which we are responsible.

Therefore, my prediction would be that this farm bill does not bring stability, certainty, or finality. The criticism has been that the last farm bill was overtaken by events and, thus, we came to the floor for the last 4 years with supplemental farm legislation, meaning more money, supplemental funds to augment whatever was in the bill. This was followed--usually in the appropriations cycle--by our colleagues in the agriculture subcommittee noting disasters around our lands: sometimes weather disasters, sometimes disasters of whatever may have come along the pike. So at least we have become accustomed to two additional rounds of farm spending annually. It may be that I have misread the situation. If so, the history of the next few years will indicate that. But I would predict, given the highly politically competitive, sensitive aspects of this bill, and the fact that the bill is likely, in my judgment, to lead to overwhelming surpluses, continually lower prices, and expressions of agony by farmers who say, ``What are you going to do to raise prices?''--that despite the thought that there is certainty involved in this, the most certain fact is that we are likely to return with proposals to spend more money on farm programs, and principally programs in the commodity areas, which are deserving of 70 percent of the attention or more in this farm bill. Meanwhile, the bottom line is that a large transfer payment of money in this country will occur if this farm bill reaches conclusion, is passed, and signed. The money that Americans hold, on which they are taxed, the money going through the taxation process, goes from a prohibitive majority in this country to very few persons in this country.

That is important to note because if, this transfer from the many to the few produced stronger farm prices and prospects for greater trade success, perhaps one could argue that this approach is justified. What I am arguing is precisely the opposite.

This large transfer of money from ordinary taxpayers to a very few taxpayers is going to result in lower prices, overwhelming surpluses, and aggravated trade circumstances that are not going to be healthy for American agriculture, that will attract fewer young people
coming into farming, and mean higher rents for those who do not own land. The value of land based upon annual, sometimes biennial appropriations by the Congress that has poured more and more money into farming situations that have the greatest loans, that have the greatest output of production. At some point there may come a year in which the public understands the farm bill situation and says: Enough. And at that point, land values will come down, as they have again and again in the history of American agriculture.

My experience on the committee spans about 25 1/2 years. I can recall the excitement in my home State of Indiana and throughout the country as land values rose in the 1970s, in some cases doubling and tripling. I can remember likewise the terrible jolt brought by the
very high interest rates in the latter part of the 1970s and early 1980s as well as other factors that led to a decline in those very same land values by 50 and 60 percent on average and worse in some cases. Now we have noted steady accumulation of values over the course of time.

I have had the good fortune, at least with regard to my own land, of farming throughout that period and watching the prices of land go up and go down and go up again and so forth, without being hurt in the process. Most other people in agriculture have not been so fortunate.

I would simply say that we are headed for economic disaster if--for the farm bill that we are about to pass in the commodity area--high land values are based upon the political competition--as has happened in this farm bill.

Let me review quickly some arguments that buttress this general outline. First of all, we got into the farm bill debate this year with a very unusual budgetary estimate. By that I mean, in a bipartisan way, Senators and members of the administration were deeply excited over the fact that our country was beginning to run surpluses; that is, we were spending less money than we were taking in. We seemed to have stronger economic growth, much higher productivity in the entire economy.

As a result, I remember the President's State of the Union Address in which he discussed the broad objectives that might be met; namely, a strong safety net under Social Security, allaying the anxieties of middle-age and young people; even more complex, that Medicare not only might be shored up but prescription drugs for the elderly might come to pass.

There were a whole raft of other reforms that are terribly important to a population of this country that grows older, that has more people in the 60s, 70s, 80s, 90s, and that is likely to be our situation because of medical miracles and better health care. These are very expensive situations involving hundreds of billions of dollars. But nevertheless, those were days in which it appeared that those objectives were on the horizon and might be met.

We are not debating those issues in this session of the Senate, important as they are to the American people. Again and again, we are reminded, whether it is by the pollsters or by advisers and so forth, that these are the issues the American people want to talk about. We can't talk about them because we are running a deficit. That deficit continues to grow.

That was apparent in the early fall when the House of Representatives passed the farm bill. One of the reasons suggested for such early passage of that farm bill, a full year before the current farm bill runs out, was that some Members said: ``Listen up, in the event you do not pass a farm bill quickly, the $73.5 billion allocated by the Budget Committee back in the spring of 2001 is likely to be revised, downgraded to a much smaller number.'' In essence, there will be much less money to spend on a farm bill. So, therefore, get on with it. Pass it, and pass it quickly to pin down that money.

We heard the same argument on the floor of the Senate during the latter part of the fall. Something had changed in the interval that was very fundamental for our country; namely, we were at war. We were having simultaneously debates, as the Chair will recall, on upgrading the defense budget, on a loan situation to shore up the airlines so we would not lose that service, the first outlines of a huge new category, homeland defense. All of that was occurring as economists pointed out month by month, we think we may be in a recession.

By the time we finished at least last year's session and had our last debate on the farm bill in December, economists said: We are in a recession. We are experiencing recession, in addition to war.

I noted at the time we debated the farm bill, whether it was in the House or in the Senate, an almost Alice-in-Wonderland world prevailed in Congress, as if somehow the war, the recession, the problems of Medicare and Social Security were for some other group to talk about but not this Congress. We were intent upon talking about additional subsidies for farmers. We already had, as people point out, the so-called baseline of about $100 billion for agricultural spending over 10 years. We developed a habit of having additional debates and adding to that baseline--now at $73.5 billion over 10 years.

That situation has continued. As a matter of fact, the recession and the Government's deficit have become reality. And the assumptions that were made in the farm bill debates of last fall have all led to much higher scoring, which means the Congressional Budget Office finds that things we thought would cost X number of dollars inevitably cost a whole lot more.

Prices deteriorated further during the debates, and that led to urgency on the part of some who have said: ``Don't stand there, do something about it--shore up those prices, give greater certainty to farmers.''

Madam President, the deficit is not going to go away. As we now observe on the Senate floor, we have yet to discuss a budget for this year, and some suggest we may not. This means that the appropriations committees will move ahead without at least the mild restraint that a budget resolution might give to our work. In fact, we know that in the supplemental appropriations bill that is coming up for defense expenditures of an emergency nature, we are going to spend a lot more money. We know that because of the discussion all over the country in the 50 States about the requirements for homeland defense.

Now, at some point, some Senator will arise--certainly not in a farm bill debate, but in another debate, and point out: ``Whatever happened to the Social Security lockbox? How secure is Medicare? What are we going to do about prescription drugs for the elderly?''

What indeed. We are about to spend those moneys--or simply run up a deficit that is huge. That is the message of this conference report to the American people. Whatever may be the desire for some certainty that a farmer can get almost $2 a bushel for corn, the certainty for all other Americans is that we are going to have a larger deficit; that the prospects for solving Social Security and Medicare are set back; that we as trustees for the American people either do not understand that farm bills cannot be discussed in a vacuum, divorced from the rest of the world, or that we are so deliberate about our intent to spend this money, come hell or high water, that we plunge ahead.

I mentioned some specifics, and I will not get into the program details that the distinguished chairman pointed out. Let me tell from my own anecdotal experience as a farm owner--one who participates in the management of my farm through the farm plan, through the bookkeeping, the legal work, and the other things that need to be done for a family farm situation. I am aware that, at least in Indiana, if I produced corn in the last few years, I could get $1.89 a bushel for every bushel under the so-called loan deficiency payment. That meant simply if the market price was $1.75, at some point I was going to get the other 14 cents through the loan program. Now, most farmers would testify that $1.89 is a pretty low price. In fact, some have come into the Agriculture Committee and said our average cost per bushel is closer to $2.50 a bushel. But others have mentioned that, in fact, the marginal cost--that is, the next bushel if they were to add it to their farm operation--frequently costs less than $1.89. That is true of many of the largest, most efficient farms in the country that have the equipment and the capital to do that kind of a job. I am suggesting that even at the current $1.89 loan rate, inadvertently--because most of us felt that, at $1.89, this would be a floor--we have set up an incentive. Farmers were beginning to produce more and more corn because, at $1.89, they were guaranteed a price and they went for it. I can understand that and so can you.

In this current bill, however, we have said that this is not enough. First of all, we will set the loan rate up higher, at $1.98 for the first two years, and $1.95 for the remaining 4 years.

Madam President, for each farmer--myself included--attempting to calculate the best interest of whether to use past history with regard to acres planted, with regard to yields and the percentage of those who were allowed into this bill, to apply the target price, this is not an easy task. Once you make the decision, you are stuck with it.

My judgment is that a great number of farmers are going to believe they made an error, and that they are going to want relief. Every FSA office, and other groups in the country that help farmers, are going to spend a great deal of money trying to figure out what the situation is for these individual farmers long before payments can be made.

I do not fault the authors of the bill. In order to keep scaling down the costs, they had to keep making it more and more complex--almost to the point that Senators sitting around the conference table found it very difficult to calculate and to understand precisely what we were doing--quite apart from members who must vote on this conference report, and apart from farmers throughout America who must somehow figure out what it all means.

But what most farmers will think it means is that out there somewhere is $2 loan rate for a bushel of corn. That is quite an incentive. That is well beyond $1.89. As a matter of fact, it was interesting; last Thursday, in commodity trading in America, the futures prices of almost all farm commodities went down, largely under the assumption--which I think is correct--that if this bill passes, the prices of everything are going to go down, and stay
down. Nevertheless, there was some glimmer of hope. If you were a cotton farmer taking a look at this bill on the date the bill passed the House, for early contracts on cotton, it was about 33 cents a pound. Well, the target price for cotton in this bill is 72.4 cents a pound. That is double the current market price.

How could this be? How could we have something that is so divorced from reality in terms of supply and demand in this country and in this world? Well, we can have it because there were sufficient votes on the conference committee, and in the House, to put 72.4 there as a target price and, further, on top of that, to offer subsidies to some industries that are attached to cotton.

One can say that things have not been going well for cotton farmers and for the communities and the infrastructure that support them. I understand that. One can say the same for rice farmers, wheat farmers, corn farmers, and soybean farmers. In fact, such things have been said about all five of them. But that is where the money is, that is where the trail went from the beginning.

I can remember in the Agriculture Committee, the chairman was trying to patiently conduct the markup dealing with areas in which both he and I believed we were on the threshold of doing some very important things. Some of this, in fact, was accomplished, and still is preserved. The chairman wanted to discuss conservation. He has been discussing that for some time. I share his enthusiasm. He wanted to discuss energy and young farmer loans and community development. Before long, there got to be a rumbling around the committee table and people said: When do we get to the money? Where is the money?

Well, they were not talking about money for conservation, although the chairman pointed out some might come to farmers who did the right thing on their land; and, likewise, there might be real help for most of rural America who will not be involved in farm payments. A majority of our members, were intent upon targeting the money on commodity payments and subsidies.

Then the question was, How much does that cost? And, therefore, as some suggested, we were spending too much money and time on conservation, on nutrition for the poor, on problems of young farmers.

The House of Representatives did not have those problems. They fairly rapidly put the money in commodity supports, and filled in as afterthoughts, in my judgment, funding for other issues such as conservation, etc. I congratulate specifically Congressman DOOLEY, a Democrat on the conference committee, who held firm to a research initiative that I think is vital and that the chairman of our committee, Senator Harkin, agrees is important.

There were a few valiant spirits. On a bipartisan basis, however, clearly those thinking about the other aspects of the farm bill were in a distinct minority. This bill was guided by how do we fill in the commodities and not do so in a way in which we keep exceeding the $73.5 billion which I kept pointing out simply was not there. The refutation to that was by the distinguished chairman of the Budget Committee, one of the conferees, Senator Conrad, who said, ``It was there; it was in the budget a year ago.'' I said all the
assumptions are gone, life has changed--war, recession, homeland defense. To which the stalwarts said: ``It is still there, every penny of it.''

How they dismiss the new estimate, this $9.5 billion overage, I do not know. I simply say they will have to keep explaining this as the cost of their bill increases year after year, as lower prices, inevitable given these new loan rates target prices, just arithmetically cause it to expand.

Therefore, I come back to the initial thought I had of the Senate as stewards of our security, of our moneys, of the rights and privileges of all Americans, not specific ones that we happen to be discussing on one day or another.

It is a coincidence that on this very day the distinguished chairman of the Permanent Subcommittee on Investigations, Senator Levin of Michigan, is conducting a hearing in which a number of the witnesses are directors of Enron. Enron came up during all of this and so did a whole spate of articles that continue on corporate governance. Business Week has a headline across the front of it: Is Wall Street corrupt?

The question is raised: Are our boards of directors of our major firms to be trusted, quite apart from the chief executives, who supposedly the boards supervise or oversee, quite apart from all the practices of the firms, whether it be accounting practices, which are dubious, the information that goes out to ordinary investors in the country about which many now have severe doubts? We have been having a shakeup in this country of thoughtfulness, of about telling the truth, about what is involved in governance.

We have that responsibility here. Senators can take the position that because this new farm bill is so complex, there is no conceivable way I can understand it; therefore, I will rely upon the Agriculture Committee, or at least a few people in the Senate who generally seem to have good judgment on these issues, sort of wise men. Many Senators take that position with regard to other types of legislation from time to time.

That is not going to be good enough for those who are testifying before Senator Levin on Enron. The questioners will say: Why didn't you know about strange practices in which assets left the balance sheet, in which strange loans were made, options were issued, and
extraordinary payments?

The front page of the papers today suggest Enron, in fact, may have manipulated the power situation in California, the allegation of persons for some time. Maybe so, maybe not.

This is serious business. I am simply charging that each one of us who is going to vote on this conference report needs to at least take responsibility. We go into this with eyes wide open. Many people have pointed out, and I have given a number of speeches at every stage along the way, that the money was not there. It was not there for a long time, even though a fiction exists that $73.5 billion over 10 years was there at one time. Nor is it $82.8 billion over 10 years, $9.5 billion more. It simply was never there.

Second, even if we knew it was not there, we could still have said: This has the same urgency as the war, as homeland defense, as prescription drugs for the elderly. It is so urgent and the ability we have to transform 2 million farmers and farm families and the infrastructure that supports them in America, is that imperative, if we are going to do it anyway with eyes wide open?

In fact, it has been clear that the bulk of the money goes to a very few farmers--a very few. That has been clear throughout. This is not a great humanitarian effort. Granted, the Senate finally got $6.4 billion in the nutrition section. We started out in the Senate, in fact, with well over $10 billion.

This is a bill that is targeted for farms in America that are large. I hope we all understand that because it is not obscure. One of the things that occurred during this debate was that a group called the Environmental Working Group--and universally despised by many people in the agricultural community--got through the Freedom of Information Act information about the subsidies paid to farmers all over the country during the years 1996 to 2000; they published this on a Web site--ewg.org. You can find out what your neighbor received. I found out in Marion County, IN, that our farm got the 22nd largest amount of payments. There are not many farms in Marion County because it is a farm inside the city. The fact is, we now know exactly who got what. This is not obscure.

The Senate responded by saying ``no farmer ought to get more than $275,000 in any 1 year--not in 10 years, but in 1 year.'' We passed that, but it went the way of all good things in this conference report.

I pointed out during the debate on the floor, that in my State of Indiana, only six farmers could possibly have exceeded the $275,000 out of 50,000 who are receiving payments. Yet the debate on payment limits reached such a volatile situation that people claimed the South would be abnormally hit, that a good number of apparently medium-size or even large farms would be decimated in the process, this even at the time that the target price for cotton was being raised 72 cents plus with a market price of 33.

I hope as Senators we go into this with eyes wide open. We clearly must understand our responsibility. Whether we understand all the complexities of the program, we know where the money went. We know in this bill where the money will go. We even know it is money we do not have, and if we thought we had it, it has to have a priority with regard to Medicare, Social Security, homeland defense, defense of our country, and some other areas that are very vital in a year in which we have a recession and declining tax revenues.

Therefore, Madam President, I respond to my distinguished colleague who says: What if this conference report fails? My own judgment is it should.

I will vote against it. I would advocate every Senator who sees his or her responsibility, vote against it.

We have a farm bill on the books now--sometimes it is dismissed--based on a $100 billion baseline. The distinguished Senators have pointed out we could have a debate, if Senators desire, for supplemental payments that we have had for a while at much less expense than what we are about to enact, with all the rigid formulas that deliberately stomp down prices and will stomp them down for the duration of the entire bill.

I hope we understand that. It is a basic principle of supply and demand. This farm bill provides huge incentives to produce more. Regarding exports, we can see the outrage of our exporting partners. Some Senators have given the impression that: ``We could not care less about them.'' This conference report is a recipe for a great deal of hurt and sadness in the wake of the huge transfer payment from the majority of Americans to a very few producers.

Finally, in committee deliberations--whether Chairman HARKIN was presiding or whether I did in the previous 6 ½ years--we had some very important discussions about agricultural income and the future of agriculture in this country. That means a great deal to me, to the chairman, and to the members of our committee. Not a single member around the table is not committed to trying to think through how we make the process better. Agriculture is a tough business. I have stated on this floor, that in the last 45 years of my stewardship of Lugar farms, we have had about a 4-percent return on invested capital. Many farmers have said: That sounds too high. In almost any other business meeting, people ask: Why have you stayed at it for 45 years? You could have gotten 6 percent on government bonds or 30 year treasuries without the problems of weather, risk of exports, and so forth.

We stay at it because we believe in farming, we believe in the soil, we believe in the life, in the tradition of our families. But we are going to have to improve our ability to make money. That comes down to research, development of good practices, proper conservation, a number of fundamental issues that are tough properly address, but are essential.

Unhappily, in this farm bill our farm associations and commodity groups have chosen an easy way out. They have said: Let's not worry about the market--which is always spiraling down. Just pay an arbitrarily high price for cotton, rice, corn, wheat, or soybeans. The American people will fill in the gap.

As I have illustrated, the gap will not be filled in that easily without the loss during the course of this bill of tens of thousands of farms, of the folks who will never get into the game, of those who will pay more, and of a distortion upward of land values.

I ask for Senators to give thoughtful consideration to these arguments and to a vote to reject the conference report.

I yield the floor.

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