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We're in a situation where the Government does give. If I have to say I would say how to turn your liabilities into an asset. I wish somebody would give me that information. But with the information I have that's strickly what the Government would be doing. The PIK program is set up, the wheels are turning to implement it. I can see no expense and it's simply a matter of transferring a storage debt to an entity that will sell this grain, the money will flow through these businesses that have been-and many small businesses are in jeopardy.
They've been financing the farmers along with the PCA and FHA. I think the second question of the man on the street may I ask, is what are these guys that sold this shaky elevator, are they a bunch of idiots, yo-yo's, or what.
We're in a small town if the heat goes off at noon and the public school superintendent wants the mothers to come pick up the kids at 12 he calls one mother, and they'll all be there. The word spreads fast.
We grew up with the man that ran this elevator. We played tennis with him, we go to church with him. Had no idea whatsoever that anything was wrong.
And, we were not conscious of federally insured versus nonfederally insured elevators and so on until the-say the embargo. And, apparently some operators speculated rather than hedged and we had these bankruptices.
That's all I have sir, unless you have any questions.
Senator PRYOR. Charles, I thank you and first I'd like to say that farmers in no way, it's my opinion, should feel apologetic about participating in this program. If you had grain stored because—the whole premise and the concept, I guess, and the philosophical approach of this legislation is one, it was not the farmers fault.
Two, it was generally or basically, in my way of thinking and I think Charles', and John's, and others, that the fault lay with an official U.S. Government policy. That policy was enunciated or took effect, I think, on December 1, 1979.
January 4, actually when it became official and that was the embargo January 4, 1980, and this was an official policy at that moment of the U.S. Government. Which nearer to the detriment, and I might say to the devastation of hundreds and hundred of farmers across this country and many bankruptcies occurred.
I think this very directly relates to that embargo. This legislation does go back-it does apply, let's say retroactively, until December 1, 1979. It is done with that idea in mind that it was the Government's fault.
You talk about Chrysler, I certainly don't look at this as a bailout here as Chrysler was. Chrysler, in my opinion, it was their fault that those cars weren't selling. They just have to make better cars if we want to sell cars and compete.
In fact, not that they're making better cars I think they are selling more cars. It was their fault and I think a distinguishing factor there, but my whole premise is, I don't feel like this is a giveaway program nor is it a bailout. It's basically trying to rectify an action and to put people back at the status quo as of December 1, 1979.
Mr. BERNARD. I'd like to recognize Doug Trainor from West Memphis, Senator.
Senator PRYOR. I'll tell you what we might do for the record so our colleagues in Washington will know. I know who most of these folks are, but maybe they ought not only state their name but also what they do, kind of their title if you don't mind.
STATEMENT OF DOUGLAS TRAINOR Mr. TRAINOR. Senator, my name is Douglas Trainor. I grew up in Hughes, I make my home here in the West Memphis area, and I'm involved in the distribution business here in West Memphis, but primarily in the farming business in the Hughes community.
I have a little bit of a different approach as far as the problem we're now facing in this area, and I go back a little bit further with the approach that I take. I look at our problem as being two-fold really. On the first hand we're involved in what I consider to be an international battle.
With foreign policy, the major item that's being discussed on the international scene and then secondarily on the local side what we have is a group of business men who are interested in surviving, we, as farmers.
On the international side the Government of the United States as well as the government of countries both developing and developed around the world, have made a conscious choice that policy, economic policy, will set to include farm, farm interests, and the local farmer, to the support of the farmer, if you will.
We, as farmers, whether we like it or not, are international business people. But in the international market place we're not competing with the farmer in France. We're not competing with the farmer in Japan. We're not competing with the dairymen in England. We're not competing with the cotton grower in Africa and India, or their productivity.
We are, instead, competing directly as individuals against the Government of France. The Government of Japan, the Government of Africa, the Government of India, throughout. We, as individuals, are facing a one on one battle against major international governments, and will continue to do so.
In these countries we must see government policy as our competitor. Again, it's not a logical marketplace. It is not a free market. I don't see a time when it will be a free marketplace. We will continue to compete individual against Government unless our Federal Government here in the United States takes a hard-nosed attitude with the EEC and others and says: “Look, we are going to compete and if it takes Government, then that's the way we're going to have to compete.
Let's step back away from that international scene for a minute and discuss Crittenden County, St. Francis County, and the other countries around the Nation that have been impacted by these more than 100 defaults on the basis of the local grain elevator going out of business.
We, as individuals, have been impacted by a number of ongoing embargoes which our Government here has chosen to use as a policy measure to either punish or reward the current country in favor at the State Department on almost a day-to-day basis.
We as farmers don't have the luxury to see that change occur without being impacted. We are impacted each time the President, Secretary of State, the Secretary of Defense, and all the other Secretaries make a statement as to what we should be doing on an international scene.
With the elevator in Hughes we then have a series of bankruptcies based on Government policies, both ours and foreign, an economic situation world-wide where economic policies have come home to roost in the local community, and probably some bad business calls based on the way we have always done business.
But as you know and everyone in the room knows, we're now a great deal smarter than we have been at any time in the past. Interestingly enough, I remember an economic lecture where a gentleman who is well-known throughout the world said we'll never have another depression.
Politically we're too smart. I always ascribed to that theory, but we were wrong. We have another depression. In the current economy then, we have to think in terms of how do we best survive. We have an excellent vehicle in the payment in kind or the crop swap program. It seemingly could be expanded with little effort to cover these gentlemen.
We have in the local community multiple millions of dollars that are going to be taken out of the community in an already depressed economy. We're not simply talking about the farmers who are involved being taken out of business. We're talking about the employment picture, including West Memphis, even though we have business people here like myself in distribution, marketing, banking, et cetera.
If Hughes goes down, West Memphis goes down, Memphis goes down, et cetera, et cetera. So, we're into a tightening circle situation. If we take these grain elevators out, our employment suffers, our distributors in chemical and farm implement businesses suffer, our local merchants suffer, our bankers suffer, our Government suffers with the PCA and FmHA bankruptcies that they will have to swallow.
Our land values are impacted. It's an ever-tightening circle. So he question then becomes, “What now, what shall we do?" We are smarter but we have still got to survive the current situation.
With the PIK program, the crop swap in place, it seems the most expeditious way, even though it's not going to be a 100 percent solution, would be to allow the PIK program and the crop swap to be expanded to include these elevators, and keep our economies operating.
Senator PRYOR. I really appreciate your comments this morning. Thank you so much.
Mr. BERNARD. Next is Davis Biggs, a farmer from Hughes. Mr. Biggs. Well, I want to congratulate the Senator on the good job that he's done first, as everybody else has.
Senator PRYOR. Well, thank you.
STATEMENT OF DAVIS BIGGS Mr. Biggs. I just came up with some thoughts the other day that are probably very much just farmer talk. But I was watching the television and I saw where in Memphis they unloaded several train loads of commodities to give out.
I had the thought that I was very proud of the fact that agriculture in this country has a surplus to divide for the needy. Which I think it is a good thing that we do have a surplus to provide the needy. School lunches all over, things that happen.
I think that the time has come when the provider needs some help. These farmers that have been hurt over the country in these grain elevator deals. So now I think the time has come that we put this PIK program back to work and try to put the farmer that has lost these things, that has produced this surplus for us where we can put it out to the poeple who need it.
I want to put those people that are producing this crop back in a taxpaying bracket. That's all I have to say.
Senator PRYOR. Thank you very much, Mr. Biggs. On several of these statements later on, I think in a little final summary I may just touch on some of the comments that each of you have made, I may save those up until the end if I might because we do have some other witnesses.
Any other comments from this particular panel? Steve, we thank you very much.
Mr. BERNARD. Thank you, sir.
Mr. BERNARD. If you would like, I can recognize some of the people from Corning, Biggars, New Madrid, Mo., Hartville, Mo., and Humboldt, Tenn. They're all here. Any of you gentlemen like to stand? These people are all farmers from other areas and they, too, have lost grain in these elevators and are very concerned about this.
Senator PRYOR. Well, we're honored to have these people from other States and other areas joining us this morning. Steve, thank you very much.
Mr. BERNARD. Thank you; appreciate it.
Senator PRYOR. Our next witness on our official list, I believe, is David Owen Burton, with the Arkansas Farm Bureau of Jackson County. David, will you please come forward?
You have a statement that you submitted and I appreciate that. We would love to hear your statement at this time.
STATEMENT OF DAVID OWEN BURTON, MEMBER, BOARD OF
DIRECTORS, ARKANSAS FARM BUREAU, BELLEVILLE, ARK. Mr. BURTON. First of all, Senator, I do appreciate the opportunity to make this statement. As you said, my name is David Burton. I'm a farmer from Belleville, Ark., and a member of the Arkansas Farm Bureau board of directors.
I am reading and making comments on the position of the Arkansas Farm Bureau on the creation of a Federal Grain Storage Insurance Corporation. We, in the Arkansas Farm Bureau with over 115,000 member families, many of which live in a cropping area of eastern Arkansas are quite concerned with what has happened in the bankruptices within the grain industry in recent years.
We are aware that this is not just a problem characteristic of Arkansas agriculture, but that bankruptcies have been commonplace in all industries. However, elevator bankruptcies are far more serious to a great many more people when they occur than most other types of bankruptcies.
We sincerely appreciate you and your staff for putting this proposal before the Congress and trying to help solve a very complicated problem. We are generally opposed to the establishment of the Federal guaranty funds to provide payments to producers of bankrupt elevators.
The national policy as passed by our delegates attending the American Farm Bureau convention is: “We oppose the establishment of Federal Guaranty Funds which might be used to pay producers for losses suffered for nonpayment of grain.” If Federal guaranty funds legislation is enacted it should require approval by producer referendum before it is instituted.
As farmers we are concerned about having to finance yet another program run by Government to protect ourselves against some dishonesty, poor management, and perhaps our own poor choice in selecting who we do business with.
While this may be something to be considered in the short run we are leery of adding still another expense to farming that always will be there. We regret that the bill does not include provisions for reducing or preventing bankruptcies. Perhaps this asks to much.
But for elevators and warehouses just to go out of business and pass the loss onto customers they were promising to serve, just doesn't make farmers feel good about such a system.
We are not sure that this would lead to reducing the instance of bankruptcies among licensed elevators. We wonder if the funding provisions will not prove to be unrealistically low. Earlier experience with the FDIC program in 1934, indicated a substantial borrowing when the value of money was much higher it was necessary before there was sufficient moneys to make the program solvent.
Farmers are not so concerned about the small initial expense per bushel of financing the program. We are more concerned that money collected creates still another entity of Government, which has the potential of becoming another large nationwide bureaucraсу.
The increased administrative cost to the elevator collecting and handling the checkoff that provides still another regulatory effort. The expense of which will be transferred to farmers storing grain.
There are several technical areas of the bill that need to be clarified before it becomes law. They include: (1) Which grain delivered to the warehouse is actually covered; (2) should other farm commodities besides grain, be included; and (3) which Under Secretary or Assistant Secretary in the USDA would be responsible for the program.
Mr. Chairman, once again we appreciate the efforts on the part of you and your staff in trying to help us work our way out of this devastating and sometimes frustrating problem of grain elevator and grain warehouse bankruptcies.