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Y4.AG 8/3: S. h29. 98-120

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

JESSE HELMS, North Carolina, Chairman BOB DOLE, Kansas

WALTER D. HUDDLESTON, Kentucky RICHARD G. LUGAR, Indiana

PATRICK J. LEAHY, Vermont THAD COCHRAN, Mississippi

EDWARD ZORINSKY, Nebraska RUDY BOSCHWITZ, Minnesota

JOHN MELCHER, Montana ROGER W. JEPSEN, Iowa

DAVID H. PRYOR, Arkansas PAULA HAWKINS, Florida

DAVID L. BOREN, Oklahoma MARK ANDREWS, North Dakota

ALAN J. DIXON, Illinois PETE WILSON, California

HOWELL HEFLIN, Alabama ORRIN G. HATCH, Utah

GEORGE S. DUNLOP, Chief of Staff

J. ROBERT FRANKS, General Counsel
CARL P. ROSE, General Counsel and Staff Director for the Minority

(II)

CONTENTS

Page

1

Inc

Solomon, James.

Hughes, Paul, president, Farmers Soybean Corp., Blytheville, Ark

Davis, Elford, representing Mid-South Farm Equipment Dealers Association....

ADDITIONAL MATERIAL

Floor speech of Senator Pryor concerning S. 550

Floor speech of Senator Pryor concerning S. 596

S. 550, reprint of.....

S. 596, reprint of.....

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(III)

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 Ingram 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

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