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with the issue of agriculture matters and those decisions today being made by the State Department.

I'm concerned, very gravely concerned, that the farmer has no advocate or no individual position to look after the interest of the farmer. The farmers of this Nation have no voice whatsoever in the development of our foreign policy.

You have been whipsawed in recent years with embargoes and threats of embargoes, and other intimidations that only tend to disrupt markets and cause considerable doubt as to whether this country is a reliable supplier.

I recently had the opportunity to go on an agriculture trade mission with Senator Cochran of Mississippi, Senator Leahy of Vermont, and myself to the People's Republic of China. On many occasions in our negotiations with the Chinese over a week-long period, many occasions I heard our own country described by the Chinese as an unreliable supplier.

We must do something very quickly to show our credibility and our willingness to engage in contract sanctity in this Nation's fulfilling its commitments to engage in this trade. I've introduced a bill, Senate bill 534, which would create an Under Secretary of State for Agricultural Affairs. This individual would finally give the farmers a voice in the development of foreign policy matters that relate to agriculture and to trade activities.

It would insure or at least help that your needs be adequately considered. Everyone today looks to USDA and the Office of Management and Budget, as the two most important agencies for agriculture. But with international trade being as important an issue as it is today, especially in our quest for improving our export markets, the State Department is one area where a voice for the farmer is so desperately needed. Again, it is good to be here this morning in West Memphis. I deeply appreciate your appearance, and your taking time out from your schedule to join with us. I look forward this morning to hearing testimony of these very fine witnesses. This will allow my colleagues in the Senate, specifically my colleagues on the Senate Agriculture Committee, to take stock of what we've learned from this meeting this morning in West Memphis.

I think that our first witness should be one of the coauthors of the resolution passed by the general assembly. At this time, ladies and gentlemen, I would like to call upon Senator Kent Ingram. Kent?

STATEMENT OF HON. KENT INGRAM, ARKANSAS STATE SENATOR

Senator INGRAM. I'd like to give a little background that led up to the legislation that was introduced and passed. Approximately about a month and a half ago a personal friend of mine, Steve Bernard, contacted Representative Bob McGinnis and myself about supportive legislation through the PIK program, which would return surplus grain to those farmers who have sustained loss from bankrupt grain elevators.

Joint Senate and House Resolution Number 6 was passed by Representative McGinnis and myself, and by unanimous consent in

FEDERAL GRAIN STORAGE INSURANCE ACT OF

1983

MONDAY, FEBRUARY 28, 1983

U.S. SENATE,
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY,

West Memphis, Ark. The committee met, pursuant to notice, in the city hall, at 9 a.m., Hon. David H. Pryor presiding.

Present: Senator Pryor.

STATEMENT OF HON. DAVID H. PRYOR, A U.S. SENATOR FROM

ARKANSAS Senator PRYOR. Good morning ladies and gentlemen. We are very appreciative of all of you coming. I'm sorry I got here a few minutes late, but driving conditions weren't too good from Little Rock this morning. I hope to have the opportunity to visit personally with most of

you after our hearing this morning. First, this is an official field hearing authorized by the U.S. Senate Committee on Agriculture. Second, I have four of our staff people with us today, two from our Little Rock office, Carolyn Keggley and Annie Powell.

From my Washington office, Jay Stockley, who is no stranger to anyone in these parts. And, also Tom Cortway. I don't know if we have a member of the Senate Agriculture Committee staff with us this morning. I don't see anyone. They will certainly be welcome should they desire to attend or make any statement.

We have four witnesses this morning, ladies and gentlemen. We're not going to have a long, drawn-out hearing. We have four witnesses, or actually four groups of witnesses, I should say, we will hear from them momentarily. Then I would like to invite anyone in the audience who has a comment or perhaps a question, to speak into one of the microphones that are provided for you, and we will get your name for the record, and it will be a part of the official transcript, which will be lodged officially with the Senate Committee on Agriculture in Washington, D.C.

I have a short statement, ladies and gentlemen, that I would like to summarize. I am pleased to be in West Memphis this morning to hear the views of several distinguished people on two measures that I've recently introduced dealing with grain elevators.

We all know the problems that have occurred in the past. Nationwide there have been almost 125 elevator bankruptcies in the last few years. The losses have been in the neighborhood of some $25 million.

Several measures have been introduced in an effort to correct the problems which have occurred. I've supported proposed amendments to the Bankruptcy Act to create and expedite a procedure for farm commodities, and to give farmers secured status when they have grain stored in elevators.

I've also introduced two bills recently, which are the subject of this hearing this morning in West Memphis. The first of these pieces of legislation would have to be approved by a referendum of the farmers themselves. We create a fund which would be available to reimburse farmers, should a bankruptcy occur.

The second bill would expand the existing payment-in-kind program known as PIK, to allow farmers who have lost grain due to the insolvency of bankruptcy of an elevator to be reimbursed with commodities equal in value to their losses.

Many communities have been hard hit by these bankruptcies, and I think an expansion of the PIK program would be very helpful in alleviating this economic disaster. Let me also say at this point in the record that Representative McGinnis and Senator Îngram introduced legislation recently in the Arkansas General Assembly, asking the Congress of the United States to address the issue of those farmers who, through no fault of their own, lost in many instances their life savings because of bankruptcy situation in grain storage elevators.

Shortly, I will call on Representative McGinnis and Senator Ingram to make a statement in that regard in support of this legislation. Before we hear from the witnesses this morning I would like to mention two questions that I think are extremely important and should receive serious congressional consideration as soon as possible.

First, I think that Congress must deal immediately with the timing of the taxes on PIK commodities. As many of you know, and I have certainly voiced my objection to this recent ruling, the Internal Revenue Service has ruled that farmers will be taxed upon receipt of the commodity, rather than upon the sale of that commodity.

And, that is the case when the crop is grown. As everyone here understands this morning, such taxation, I feel, would be totally unthinkable and unbearable. Because the money is simply not available. This must be changed and other tax issues must be clarified.

I'm now cosponsoring a measure to correct and address this problem. Today the Senate Finance Committee, Subcommittee on Energy and Agriculture Taxation, of which I am a member, is holding a hearing

on the tax issues relating to the PIK program. I'm proud to be a member of that subcommittee, and following the hearing this morning I will return to Washington to try to get Congress to help approve the PIK tax bill, and to grant clarification and relief in this area.

The second issue concerns agriculture trade. I hope that we can discuss the creation in the Congress of an advocate's position for the American farmer within the State Department. You may think that is a little strange, but after 4 years in the Senate and a member of the Senate Agriculture Committee, dealing not only with the Office of Management and Budget, but more specifically

with the issue of agriculture matters and those decisions today being made by the State Department.

I'm concerned, very gravely concerned, that the farmer has no advocate or no individual position to look after the interest of the farmer. The farmers of this Nation have no voice whatsoever in the development of our foreign policy.

You have been whipsawed in recent years with embargoes and threats of embargoes, and other intimidations that only tend to disrupt markets and cause considerable doubt as to whether this country is a reliable supplier.

I recently had the opportunity to go on an agriculture trade mission with Senator Cochran of Mississippi, Senator Leahy of Vermont, and myself to the People's Republic of China. On many occasions in our negotiations with the Chinese over a week-long period, many occasions I heard our own country described by the Chinese as an unreliable supplier.

We must do something very quickly to show our credibility and our willingness to engage in contract sanctity in this Nation's fulfilling its commitments to engage in this trade. I've introduced a bill, Senate bill 534, which would create an Under Secretary of State for Agricultural Affairs. This individual would finally give the farmers a voice in the development of foreign policy matters that relate to agriculture and to trade activities.

It would insure or at least help that your needs be adequately considered. Everyone today looks to USDA and the Office of Management and Budget, as the two most important agencies for agriculture. But with international trade being as important an issue as it is today, especially in our quest for improving our export markets, the State Department is one area where a voice for the farmer is so desperately needed. Again, it is good to be here this morning in West Memphis. I deeply appreciate your appearance, and your taking time out from your schedule to join with us. I look forward this morning to hearing testimony of these very fine witnesses. This will allow my colleagues in the Senate, specifically my colleagues on the Senate Agriculture Committee, to take stock of what we've learned from this meeting this morning in West Memphis.

I think that our first witness should be one of the coauthors of the resolution passed by the general assembly. At this time, ladies and gentlemen, I would like to call upon Senator Kent Ingram. Kent?

STATEMENT OF HON. KENT INGRAM, ARKANSAS STATE SENATOR

Senator INGRAM. I'd like to give a little background that led up to the legislation that was introduced and passed. Approximately about a month and a half ago a personal friend of mine, Steve Bernard, contacted Representative Bob McGinnis and myself about supportive legislation through the PIK program, which would return surplus grain to those farmers who have sustained loss from bankrupt grain elevators.

Joint Senate and House Resolution Number 6 was passed by Representative McGinnis and myself, and by unanimous consent in

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