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You know it's been brought up that we are a bountiful country and I guess it's better to try to find a way to get rid of the surplus than how to feed the starving in our own country. But, you know, 15 million people in this world starved to death last year.
Somehow or another we never have been able to devise that formula of distribution or payment or whatever, to get our surplus to those people. Somehow or another I think in our efforts that must be our goal. We've got a long way to go to reach that decision as to how to strike that balance.
Second, I'd just like to comment relative to embargoes and so forth using food as a weapon. I think for too long we've had a policy in the country and it's been through several Presidents, it's not just Democrats or not just Republicans, it's been brought out.
But several administrations have used food as a weapon. I think that is a State Department
sort of mentality, that they have gotten us into and they convince Presidents, I think, and we've got to use this food as a weapon.
Well, I don't think food can be used effectively today, and in our international situation, as a weapon. But I do think that we can use food in another way. I think that we can use food as a tool, not a weapon, but as a tool.
There's ways to achieve an end, and I'll just cite an example once again. John Stipe came over to our Little Rock office about 6 or 8 weeks ago and we visted for awhile. He came up with a suggestion that I go back to Washington and look at the concept of reinstituting a very primitive and tribal custom known as barter.
When John mentioned that to me somehow or another it sounded simple, and it sounded workable, and it sounded right. John, since that visit we've had I must tell you that I think we've made a little bit of headway. We haven't gotten there yet, but we've asked for some studies to be commissioned. We hope they don't take too long.
I don't think it will be hard to pull those facts and figures out. Of countries like Mexico, Venezula, and Peru, like some of the Third World or developing countries that do not have currency today, to buy food for their people.
But yet they have value, they have minerals, they have resources that our country needs. We have the food to trade them. I think there's some 13 to 15 countries now engaged with other countries in barter agreements. Of trading mineral for mineral, or whatever, and I would like to see us very, very soon look at this as a concept.
In a hearing before the Finance Committee of which I am a new member, I recently mentioned this, John, to Bill Brock who is our Trade Representative. He came back from Geneva all depressed about the GATT proposals and the EEC, what all these people are doing to us, not only to farmers but to us generally in our trade situation.
I asked him about the concept of barter. They are not doing much on it now, but we've got to keep reminding them to try to look at that possibility. Also, with OPEC falling apart, I think it would be a splendid time right now to engage in barter with Mexico for their oil to defend or fill up our strategic petroleum reserve.
I think it's the opportune time. I think we could do it quickly, efficiently. I think we could trade them grain that they desperately need. So, I think that once in awhile we hear that history repeats itself, and we can certainly learn some lessons from history.
We've got to live in the present and the future. Don't get me wrong, but sometimes some of those old ways and old customs were not too bad, and we can expand upon them and possibly use them effectively to help our people.
Last Friday I was on the plane; I had to go and make a speech down at a university in Florida, and then I had to fly back to Hot Springs and ultimately Fayetteville, and in that whole process I kept reading in the papers that we were renegotiating some of the loans with Brazil.
Well, once again I think we did not learn a lesson in our country, and I wish that I had been on-frankly I wish I had been aware of this loan, and maybe we could have changed the course of it a little bit.
We, once again, loaned Brazil $400 million. What we failed to do is establish any strings. We failed to establish any pressure points. I think it would have been a perfect opportunity for us to have sent a necessary message or a tie to restrictions to the Government of Brazil that they would no longer engage in unfair competition with soybeans and other-poultry and other commodities, other crops that they're unfairly competing with us at this time.
In other words we had an opportunity and we failed in that opportunity to exercise that leverage that we have. So I'm hopeful, Tom, that we can keep better track of some of these loans that are coming up, because we're going to see a lot of these loans in default. We're going to see a lot of these countries under pressure, and I think that we can utilize the leverage that we have.
Once again using leverage in a proper way that will allow us to compete fairly with EEC and the GATT partners. I think just one or two other comments. One is about OPĒC. January 23 is going to be probably one of the most historic dates in all the history of our economic world, because that's the date that OPEC fell apart.
We're about to see plummets, it appears that this point, in the price of fuel and in the price of oil. Some are even saying down to $20 a barrel.
It's always been my understanding that about 17 percent of the cost of agriculture that the cost of doing business, as a farmer, is fuel and the cost of energy. It may in some instances be lower, some higher, but I think one, we're all about to get a break there.
I think it's going to mean a lot more consumer dollars that are going to be able to be spent that were being spent there. And, it may give all of us a little breather and certainly a break that we've been needing since 1978, since the formation of OPEC and sincenot the formation of OPEC but since we've seen those fuel prices escalate to the point that they have.
I just read on Saturday in the Wall Street Journal that for every penny that a gallon decreases United Airlines saves $14 million. So, if it goes down 10 cents a gallon they save $140 million.
I would say the cost of running the whole Government would benefit by some billions and billions of dollars in fuel costs and gasoline for vehicles and on down the line.
Second, I'm just very hopeful that we're going to continue seeing interest rates subside to some degree. But I don't want to get your hopes up too much, because if our deficit in this country continues to rise as it is today, very honestly I think that interest rates will start moving upward once again.
When we start as a government going into that pool of money and borrowing money to run the Government, to run all the Federal programs that we have to maintain, all the services that we have to perform, I think that we're going to basically sop up and use up that supply of money that could be utilized for private capital.
So we're all glad that interest rates are going down. Twenty-four months ago interest was 20 percent. Today is a little somewhatwell, depending on—it's not 20 percent any more. I don't even want to quote an interest rate today, but it's almost half that.
But I would say don't become so exhilarated about interest rates going down that you don't plan possibly in the future for interest rates taking another upswing in the coming month or maybe a year ahead,
because unless we do something pretty dramatic about the deficit I think we're in some real trouble.
There's one man that has—that some of his colleagues at the coffee shop awhile ago expressed an interest in making a statement. I'd be glad to let him do so should he desire. Mr. L. E. Vanderford, would you like to say anything?
Some of your cohorts and colleagues at the coffee shop this morning said that I would recognize you as a young version of Santa Claus. I pointed you out, so should you desire to say anything we'd be glad to hear from you.
Mr. VANDERFORD. Senator, I appreciate the opportunity to make a comment. I hadn't planned to say anything. I would like to point out that the warehouse industry is certainly my prime interest. There has not been a failure in the Federal warehouse system in the Memphis division, ever.
That's the only comment I have
Yes, sir? Let me do this if we might. If you do have a statement or question maybe we could just use this standup microphone. If you would just come and state your name for the record.
STATEMENT OF JAMES SOLOMON Mr. SOLOMON. My name is James Solomon and I'm a farmer in the Hughes area. I would just like to comment on something you were talking about a while ago if we're going to diverse a little bit, about the Brazil situation.
Right now at this present moment Dr. Hardwick is in Brazil showing them how to breed soybeans. He is a gentleman who has put us all in the farming business as far as growing beans. I think if we're going to straighten the whole situation out we're going to have to draw the line.
It's not fair for all these people sitting here going broke and the USDA is financing our plant breeders to go to Brazil and help them get on to produce beans to sell on the world market.
Senator PRYOR. That is a very good point.
Mr. SOLOMON. You know this situation is very complex. I am a strong supporter of you and your appearance on "60 Minutes" and some of your comments to the simplicity of these things that have been quite admirable. But I don't think also, while I'm on the soapbox, that it's fair for the Government to license International Harvester to go over there and build combines for the Russians, and then embargo our grain to them.
I think something needs to be done. The comment the gentleman from the Agriculture Movement said about someone in the State Department should know something about agriculture. We've got a tremendous selling job that we're going to have to do.
We've got 2 percent of the population farming. We got 98 percent we're going to get out there and convince that we need something done. We got a-a good friend of mine, a farmer here that's donethe only one that's done a good selling job here all morning was Davis Biggs when he said we have surplus we can give to the poor.
We're going to have to hit more upon positive aspects than getting up here and just crying over spilled milk.
Senator PRYOR. Yes.
Mr. SOLOMON. We're going to have to go forward and come up with some positive plans, help from the Government. We can't get the Government out of it to get this thing back on the road. I would like to see you do your best to try to do something positive in addition to helping bail out these people who have lost money in bankrupt grains.
Senator PRYOR. I'm very appreciative of your comment. Thank you so very much. Mr. SOLOMON. Thank you.
Senator PRYOR. Yes, sir, if you will please state your name. STATEMENT OF PAUL HUGHES, PRESIDENT, FARMERS SOYBEAN
CORP., BLYTHEVILLE, ARK. Mr. HUGHES. I'm Paul Hughes, the president of the Farmers Soybean Corp. in Blytheville, Ark., which is a stock company that's been in the grain business for about 32 years, and I'm also secretary of the Mid-South Soybean and Grain Shippers Association.
I just wanted personally to take this time to point out some of the things that we pointed to your then assistant, Dennis Robinson, in July when he brought your bill over to our meeting in Memphis.
But the thing we feel real strongly about is one, that is has got to cover all warehouses. You cannot pick and choose which warehouses are in it unless you take the Agriculture Movement man who advised that they can buy the insurance as they want to or not, but if one warehouse got the choice to use it and the other one has got the choice not to use it, then that might make people go one way or the other.
The other thing we are—and we appreciate it, it is in the bill. That the farmer ought to assume some risk where they trade. Because most time, most elevators going bankrupt throw up some signals of the fact that they are going bankrupt, they start paying too much money for grain, they start paying a little extra money for grain if you wait a week to get your money. And, this type of thing.
And, we don't want it to be to the point where a farmer will say well, I think he's going bankrupt but the Government will pay me anyway, so I'll just go ahead and try to get that extra money. And, the other thing that I think that you have done is real well is we've talked about the FDIC.
That cost over $125 million a year to administer. We do—and there's about the same number of grain elevators as there are banks. We do not believe that we need a deal that costs $125 million a year to administer. And, we need to keep this on a low-cost basis if it's possible.
And, then I'm probably wrong and this is probably not the place to bring it up. But I just want to question your figure of $25 billion, and you may be closer to right than I am. But that would be, if 125 elevators are correct, that's
a loss of $200 million in elevators. And, at $4 a bushel for grain, each one of them would have had to have 50 million bushels.
And, so I want to question that.
Senator PRYOR. Mr. Hughes, that may have been a figure that in the entire history of elevator bankrupticies. I don't know whether it was the history, say going back to December 1, 1979, or not. It may have been going back
Mr. HUGHES. But the losses are substantial but I just question if it's been $25 billion of-up to this point.
Senator PRYOR. And, also it could have been the ripple affect through the economy of tax losses and the buying power lost, et cetera.
Mr. HUGHES. But I guess in summation that I would like to say that we do appreciate your effort to give some protection to our customers and some assurance that where they trade they will get
Senator PRYOR. Mr. Hughes, thank you so much. Is there another person that would like to make a comment?
Yes, sir, come right forward please.
Mr. BERNARD. Senator, I think that figure was $24 or $25 million rather than billion. I think that was the thing.
Senator PRYOR. I think that's probably correct. The figure should be $25 million. Yes, sir, would you-STATEMENT OF ELFORD DAVIS, REPRESENTING MID-SOUTH
FARM EQUIPMENT DEALERS ASSOCIATION Mr. Davis. Senator, I'm Elford Davis. I'm a local agricultural dealer here in West Memphis, and I was asked to come forward this morning on behalf of the Mid-South Farm Equipment Dealers Association which consists of the dealers in Arkansas, Mississippi, Tennessee, and the Boot Heel of Missouri.
We just want you to know that we support you wholeheartedly in the two programs that you have going. And, please excuse my throat.
Senator PRYOR. Thank you very much. Thank you so much. Would there be another statement or question? Well, yes, Charles.
Mr. ADAMS. Yes, sir, I want to reiterate what Mr. [inaudible] said in essence. It seems it would only be fair that in order to open a