« PreviousContinue »
We're grateful for your introducing both of these pieces of legislation, and we're very happy, of course, that you've recognized the efforts of Steve Bernard. I think every farmer in the United States, whether this bill passes or not, it indebted and owes a debt to Steve Bernard.
Senator PRYOR. I certainly agree.
Mr. McKNIGHT. Like I said, we favor this Equitable Farm Compensation Act and I can't for the life of me understand how any farmer in the United States, or any farm organization, would oppose aiding fellow farmers who have been damaged by bankruptcy of an elevator. I would suggest, sir, that you make a little more clear in the bill that this farmer's loss is not just a bushel of soy beans or a bushel of grain at the market price on the date.
But he's lost interest on that money for a number of years, and I really think that the act could be made just a little more clear in that respect. It doesn't say that they won't compensate him, but it doesn't really say that they would. I think it would be real advantageous to these people if we're going to do anything for them, to do our best to go ahead and make them whole to that loss.
Senator PRYOR. I think you've make a good point. I thank you.
Mr. McKNIGHT. We feel that these bankruptcies are the direct result of the embargoes. They are the indirect result, I think, of poor farm programs over a number of years. And, these are the band-aid type legislation that we have to have, but until we can get a farm bill that really will support agriculture like it properly should be, then these measures are absolutely necessary.
I'm very much in favor, our organization as you know, is very much in favor of a bill very similar to the Bumpers-Hodges bill which was offered in 1978. I think offered again in 1979. And, I hope again will be offered at sometime in the future.
We feel that forward planning should be available in agriculture like it is in all industry, and that perhaps while none of us like to operate under Government restrictions this is the only type of marketing planning that we can have is through Federal Government.
This should be done, we feel like, at a price support level that justifies being in business. But that's not before us here today, but we think that these are the underlying reasons that we've got these bankruptcies, the underlying reasons why these farmers, when they do get hit with a bankruptcy are unable to survive.
I'm very happy to see that you've introduced S. 534. We think this would be extremely helpful. We think it would be even more helpful if you would just remove the President's authority to impose on an embargo, except in time of war.
Beside that you would be doing the President a favor. You know we've had two Presidents that imposed embargoes, both of whom sought reelection and neither of whom were reelected.
Probably to some extent has to fall on the embargo. I know that Gerald Ford was hurt by the embargo and there's no doubt that Jimmy Carter was hurt by the embargo. So perhaps we should remove that temptation to commit hara-kiri more or less, and do away with it.
Senator PRYOR. I don't know of anyone in our country that was helped by the embargo.
Mr. McKNIGHT. I think as foreign policy goes it was a total failure.
Senator PRYOR. Right.
Mr. McKNIGHT. We didn't coerce the Russians to do anything, and really the 1975 embargo was supposed to live short fall embargo because we had a short supply. But I think it was adequate supplies for us to do our exporting.
Had we continued to receive the prices in 1975 and 1976 that we got in 1973 and 1974, we wouldn't be here today. We really wouldn't. These farmers could have weathered that bankruptcy without-with difficulty, but they could have weathered it.
As it is, they can't. And, that's not the end of it. We hear that there are 10 farmers involved. There are actually going to be others, because the trustee is attempting to set aside some payments that have been made to farmers.
And, if they set those aside as being a preference you'll have more farmers involved and it will be a disaster to them also. So, there's nobody that have profited by the bankruptcy failure, except maybe some stock brokers, or commodity brokers.
On the insurance aspect, Senate bill 550, we are in favor of this. Just like you said a minute ago as being the only game in town. We have fire insurance that we pay for. We have storm insurance that we pay for. We have available to us crop insurance if we want it.
I don't see that it would really be disadvantageous for the Government to make available to us insurance against elevator bankruptices. Your bill, I think, gives us a referral back to the farmers, you can vote on it and if 50 percent approve it well, we'll have the organization and the insurance available. But if they don't, then it disappears.
A way that might be—that everyone would be happy with would be to have it like crop insurance whereby the individual farmer when he delivers his grain, would have a place to check on the delivery ticket or the warehouse receipt, whatever, whether he wishes this insurance or not.
I personally would take it. I think we don't have any opportunity to have any of that type insurance, and we'd like to see it made available.
Senator PRYOR. You don't think that your membership would object to paying a small fee for this protection?
Mr. MCKNIGHT. Well, I don't think they would. They don't object to paying fire insurance. They don't object to paying-I mean, this is our responsibility ulitmately.
Senator PRYOR. I understand.
Mr. McKNIGHT. We're protecting our grain just like we protect our homes against fire, our crops against disasterous weather conditions and other things. It's up to the individual to protect himself. We can't rely on the Government to come to our rescue just because we've got a grain elevator going bankrupt.
We'd like to and we're urging you to in this Equitable Farm Compensating Act, but I don't think you'll find your city colleagues are going to be willing to do that on an annual basis. I really doubt that.
Senator PRYOR. I doubt it will be a year after year proposition. I think you're absolutely right.
Mr. McKNIGHT. Right. I think they're willing to help us through a hard time, but I think they rather us to have something that we can organize among ourselves and pay for ourselves, and this is the ideal thing. Perhaps there are other things that might be better.
You can always say, well, he should have done so and so. But the fact remains they haven't. This is the best yet and we'd like to see it.
Senator PRYOR. Well, I have no pride of authorship. If you come up with a better plan I will be willing to try to support it, I'll tell
Mr. McKNIGHT. Well, I'm satisfied with your representation, Senator.
Senator PRYOR. Thank you.
Senator PRYOR. Well, also I might just mention that before the embargo, the Soviet Union used to import 70 percent of their wheat from the United States, and now they import about 17 percent of their wheat from the United States. And, they're having an increase in imports on their side and that has been since the embargo.
Mr. McKNIGHT. Yes, sir.
Senator PRYOR. We can see the devastating effect of that embargo.
Mr. McKNIGHT. In 1980, I secured from the-through your office the sheets from the Department of—the trade
Senator PRYOR. U.S. Trade.
Mr. McKNIGHT. Department of Commerce. The exports to the Soviet Union and the imports from the Soviet Union, and it was astonishing that we were shipping motors that would go into their trucks and tanks and restricting grain.
If that's foreign policy I must have a total failure of concept. It looks to me like we ought to be willing to feed them but not give them something to fight with.
Senator PRYOR. That's exactly why, in my opinion, we need someone in the State Department that knows something about farmers and are willing to stand up for farming interests. We don't have that today.
Mr. McKNIGHT. Yes, sir, absolutely. I think we need somebody in the State Department that knows something about foreign policy.
Senator PRYOR. You're quite right. thank you, Mr. McKnight.
Is Steve Bernard still here? Did Steve have to leave? Steve, if I could, could I have you and John back up just for a moment? I have three or four questions for you and John Stipe for the record.
First, do you have any idea of the number of farmers in this part of the State that have been adversely affected by the bankrupt elevator situation? I'm just talking about kind of general figures.
Mr. BERNARD. No, I don't have an exact figure, but like I said in my testimony, there's 10 or 12, I think, in the St. Francis, Lee County area. And, up in the James Brothers case, and things that happened up in that part of the State.
I would assume that we probably had 50 to 75 farmers varying in degrees. Some of them have lost 50 bushels and some of them have lost 50,000 bushels.
Senator PRYOR. So it's not only the number of farmers, it's the impact upon not only their families but the communities and the entire economy.
Mr. BERNARD. That's right.
Senator PRYOR. The impact. So we've got not only numbers of farmers but also the economic impact that ultimately flows. Now, Mr. Stipe, how many of you think your lenders or other farmers in your area might be helped by the passage of the PIK extension idea of compensation? Do you have any estimate there? It would be a guess.
Mr. STIPE. As far as the warehouse figure-PIK, you're speaking of, Senator?
Senator PRYOR. Yes.
Mr. STIPE. Well, Steve's figure would be probably closer to right. Now I don't know of any of our other farmers that were involved in any of the outlaying elevators that would be covered by this. Now, we've had other bankruptcies prior to 1979, Senator, and you're not going back far enough to pick those up I understand.
Senator PRYOR. Going back to December 1, 1979.
Mr. STIPE. Yes, sir, well, we have one elevator that went bankrupt in-well, they never declared bankruptcy, but it went under in 1976, and the one I referred to earlier here that farmers are still suffering from. This could be-Steve's count would be fairly accurate, Senator.
Senator PRYOR. All right, let me ask this. This is a question to Steve. Steve-oh, go ahead did you have-
Mr. BERNARD. Someone just pointed out a figure to me. I was not aware of how many people were involved in this thing. In northeast-farther up in northeast Arkansas, James Brothers, and I think it's been another one or two up there. They just told me it was about 250 or 300 people involved, which it looks like Arkansas is probably or has probably got 10 percent of the total in the country.
If that's the case there-we said there were 3,000 farmers affected nationwide.
Senator PRYOR. I think around 3,200 farmers nationwide.
Senator PRYOR. Twenty-five million in losses. Now, you—Steve, you really are kind of giving me a lot of undue credit here about this legislation. You're kind of the father of this whole bill, this whole concept.
Is there anything that you see right now that needs to be added or subtracted from this legislation as written to make it better? If so, please feel free to make that suggestion.
Mr. BERNARD. As pointed out by Deloss McKnight a minute ago, and I gave Tom Cortway earlier, the change that I had suggested in the bill, a bushel for a bushel-a man lost-we're going to use soybeans as an example.
În 1980, a man looses a bushel of soybeans-he had them priced and they were worth $8 a bushel. If we repay that same man with a bushel on equal basis a bushel today, he's able to get $6 for them.
He gets three-fourths of his original loss back, plus, as pointed out in my illustration he has lost 15 percent, 16 percent, and 17 percent of the total loss in the last 3 years.
So he only comes up with less than half of the money that he has really lost. To make it a true compensation the man will have to be paid the equivalent of at least two bushels of soybeans, if soybeans are the example, for each bushel he's lost.
Senator PRYOR. I understand.
Mr. BERNARD. To make him anywhere near whole again, and that probably still wouldn't do it.
Senator PRYOR. That's a very good suggestion. I don't think of any other questions that have not been covered. John, do you have
Mr. BERNARD. Could I add one
Mr. STIPE. I would like to add one comment, Senator, the idea of timeliness has been mentioned from two aspects. One, right now the farmer is needing some immediate action so he can go ahead and farm this year.
The second is from the Government aspect. Right now they're paying storage costs on this grain.
Senator PRYOR. Right, that's a very good point.
Mr. STIPE. We could save the Government a lot of money if we could move this on and get it into effect in the very near future.
Senator PRYOR. Fine. Thank you so much. Steve?
Mr. BERNARD. I'd like to point out one thing along that line. In the bill, I think that from the date the bill was enacted, the Secretary of Agriculture had 60 days in which to publish in the Federal Register the list of all the bankrupt elevators and then there's 60 days in which the farmer has to respond.
Then there's 30 days for the Secretary to decide whether that is—that loss has been documented enough to be enacted. And, we start adding 60 here and 60 there and 30 here and 45 there, and the first thing you know this—these people are going to have another year's interest on this loss.
Senator PRYOR. That's right.
Mr. BERNARD. And, then two bushels for one will not pay for it. So, something needs to be moved on rather quickly.
Senator PRYOR. That's a very good point.
Mr. BERNARD. There's two or three people I know of that will not—locally, and I would imagine probably 50 or 100 of these people in Arkansas, Tennessee, Mississippi, Louisiana, and Missouri will not be able to farm without a promise of this or some other type miracle this year.
Senator PRYOR. Very good. Steve, thank you and John. We appreciate that.
I'd like, if I might, just to make two or three comments here on some of the statements that have been given. It'll just take a moment, in summary. I think one of the strangest, most ironical situations for any country to find itself in is about 95 percent, it seems today, of all the agriculture legislation that we're looking at in Washington, in all the committee hearings that we're having and all the discusssions that we're engaged in, it's kind of ironical that all of them are dealing with how to get rid of the surplus.