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This one man told me, he said you know, to go broke is very damaging to a person's life, however, when the cause of the failure is a result of someone's actions other than yourself it's especially trying
The no-cash, no-credit feature of this bill brings to light the fact that there's a lot of talk in Washington relating to the deficit. This bill should be attractive to all lawmakers in Washington because it allows them an opportunity to help somebody that needs help without affecting the budget.
On reducing the surplus and stocking the storage it seems that the emphasis today is on reducing grain surpluses, and we've had a number of examples and reasons of reducing surplus. Senator Cochran and Senator Huddleston proposed that we give away this grain to foreign countries.
We've had one Senator suggest we give a bushel and sell a bushel at the same time. Senator Dole, on the 19th of this month proposed that we have a massive food distribution of dairy and grain products in the amount of $1 billion.
No doubt all of these will work in helping reduce the surplus, but we, the farmers that have lost this grain, feel as if we should have some preferential treatment when this grain is distributed. As far as the feature that will help pay off a portion of their bills, the FmHA, PCA's and so forth, I'd like to point out a majority of these bills will never be paid by these farmers without the passage of this or some similar legislation.
As a point of interest the good ole American spirit has prevailed because the lenders and the suppliers have been extremely liberal with their credit policies, trying to help these people stay in business. But in this case and any other case there does come a payday, and payday is now for these people.
If they're not able to pay we're going to have some staggering losses, not only by the farmers but by some of the suppliers and the banks and the PCA's and so forth. Income tax base, it will create some income tax. Most of the farmers have enough losses that they can carry forward without having to pay any tax this year.
But these dollars turn over several times, so I think that the income tax will be arrived from it in that the suppliers and so forth will be taxable. The simplicity is that the bill can be put into effect with a minimum amount of effort and legislation.
The only other thing I have to say in closing is that I'd like to point out that most of the farmers that suffered these losses are family-size operations. These are not the big 15,000- and 20,000-acre operations. They are the 500- to 1,500-acre farmers, and they are the very type people that we need to keep in business if we're going to keep our rural economy strong. Because they are the backbone of the economy.
Other than that I don't have anything that I would like to further say, other than to thank you for your support. We recognize you as the captain of our team, and we want to offer to help you in any way we can.
Would you like for these people-
Senator PRYOR. Yes, just to comment on some of the things you said, Steve, and then we'll call on your colleagues.
It was basically because of you and others that this bill is now in the Senate. But one of the only obstacles I know of to this bill's passage is the fact that it doesn't cost anything; it is simple; it helps many people; and it makes sense.
I know that sounds crazy. We have asked the U.S. Department of Agriculture, Mr. Block, and his people to comment on it. The only comment thus far-we've now asked him in writing to comment, but the oral comment was, and the only comment we could get and I quote—they said, “Well, it's interesting.”
I'm just hopeful after reading what we're up against here that they will go further and support this legislation. I have enough hope and optimism that commonsense is going to prevail. I just think they will ultimately support our legislation.
Would John Stipe like to make a comment at this time? Or, Steve, you could sort of call on your own individual panel there. John?
STATEMENT OF JOHN STIPE Mr. STIPE. Senator, I want to add my thanks to Steve's for your being here and for your showing interest in heading up this bill. I also want to thank you for the comment you made in the support you've given to the Secretary for Agriculture in the State Department. I think this is—has a lot of merit.
Senator, I further want to thank you for your recent assistance in helping the farmers of eastern Arkansas, and the whole Nation in our relations with other Government agencies, more particularly the SBA.
I appreciate your concern for agriculture and for your taking time to be here today. I want to express my appreciation as an individual who's concerned over the farmers of this area, more particularly those who have suffered loss through no fault of their own, through the grain bankruptcy the public warehouse bankruptcy happenings.
We still have them going on. It seems like maybe we've had more than our share of the total you mentioned earlier this morning, in our area, it has certainly been devastating to our total agriculture economy.
But when it's devastating to our agriculture economy it is certainly a tremendous hardship on the individual involved. When the individual farm family that Steve mentioned puts a lien on most of their assets, their total, what they work for their whole lifetime, to make one more crop, and then have this crop disappear through no fault of their own, it is a hard thing to swallow.
The tax treatment—the second point is the tax treatment on this. I think this has a lot of merit and a very interesting philosphy if you'll follow here. The grain coming out will be no expense or no addition to the Federal budget.
Now, I don't know where the money will go that comes out of the grain that will be released from the CCC for this bill, but if it turns over five times and these people are in a 20-percent-tax bracket that handle this money, it's a very unique way of moving surplus commodities into the Federal Treasury in the form of dollars.
You can get a one for one there on the five time turnover. The third point, why this particular industry-we, in national interest had several grain embargoes, and this, I think lead to a lot of the failures of the warehouses from 1976 on forward.
I think we, as citizens of the country, nonfarmers ourself, have a certain responsibility back to the farmers of-because of the national interest that was served through the grain embargos so to speak.
And, then fourth, you mentioned the unique point the other day of paralleling this idea with the FDIC. The banks and savings and loans serve a public interest. They have a public trust. The grain warehouses serve a public interest and they have a public trust.
We do not have the safeguards in the warehouses that we have in the banks and savings and loans. So I think this is a very good point to do this. When you put money in the bank you're putting not your total assets, but you're just putting your cash dollars that are available, and yet they're insured.
When a farmer puts his total production in a warehouse he's putting the equivalent sometimes of his total assets in this effort. So the degree of risk in the warehouse end of it is much greater than the degree of risk in the banking industry.
So, I think this is a very good parallel, Senator, that you drew there and I'd like to emphasize that.
It was mentioned earlier-I believe you mentioned earlier or someone did that it takes more than just a little while to overcome this when you don't have your total production go under and a warehouse has gone bankrupt. We've had warehouses in this area—I was thinking of one particularly in 1976, that went under, and a lot of farmers in that area did not loose their total production but they lost a portion of it.
Some of these have not recovered yet. They're still in business, understand, but they're still in debt because of the losses suffered back there, you see. So it takes awhile when you have less than a total wipe out to recover from these, and certainly when we have had four crop failures in 3 years it doesn't allow recovery in a very fast order.
Senator, this is all I have on this unless someone has some questions on it. I just want to, again, thank you for this assistance you've given the farmers, particularly in eastern Arkansas, and representing us in Washington.
Senator PRYOR. Thank you, John.
STATEMENT OF CHARLES ADAMS Mr. ADAMS. Senator, I've tried to think of what's negative about it, and I think the question is going to come up, should the Government give? And, I consider myself a basic conservative, and if you ask me should the Government give to bail out victims of bankruptcy I would say no.
But I think this is a unique situation and we've got to look at the world around us. We've got to take Chrysler as an outstanding example. The Government guarantees Government loans in New York City, et cetera, et cetera.
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.