Statement of Rickey Bearden
House Agriculture Committee
San Angelo, Texas
May 9, 2006
Mr. Chairman and members of the Committee thank youfor allowing me the opportunity to present my thoughts on current and futurefarm policy. My nameis Rickey Bearden. Ilive and farm in Plains, Texas. I have farmed since 1975 and I am the thirdgeneration of my family to farm in Yoakum County. My operation consists of atotal of 6,000 acres – 2,000 acres irrigated and4,000 acres dryland. I growcotton, peanuts, milo, wheat and black-eyed peas. I operate a family farm andam a full time,commercial sized farmer. My income is completely dependant on the success of myfarm operation.
I support the current farm bill. As you know thestructure of thecurrent farm program is composed of direct and counter cyclical paymentsdecoupled from production and the marketing loan program that is coupled towhat happens on the farm during the growing season. The combinationof decoupled and coupledpayments works, andshould be continued in the next farm bill.
The current program has proven to be a dependablesafety net and is not, contrary to popular belief, a guarantee of profit. Thecotton target price of $0.72 per pound and loan rate of $0.52 per pound are essentially the same aswhat were in place in 1981. To put this in perspective imagine if you had notreceived an increase in your salary since 1981, yet virtually all of the costsassociated with doing your job had increased.
One of the biggest threats to commercial sized operators is the effort tofurther limit program benefits. We continually hearthat 20 percent of producersreceive 80 percent of the payments. Let's examine this a littlefurther, keeping in mind that USDA's only requirement to be considered a farm is that thefarm generates at least $1,000 in gross sales. According to USDA there are 2.1 millionfarms in the US. USDA classifies 66 percent of these farms as limited resource,retirement and lifestyle farms that do not rely on the sale of agricultural products toexist. The remaining 34 percent, 700,000 farms, are commercialsized operations like mine that do rely on the income generated by agricultureoperations to survive. These 34 percent of farms do receive 80 percent ofpayments. What is alsotrue, and usually left unreported, is that this group of farms produces anestimated 90 percent of the commodities that receive government support. USfarm programs are commodity support programs, not lifestyle support programs. I encourage you tomaintain this principle and keep US farm programs supporting the crops weproduce. Commercial sized family farm operations drive our local ruraleconomies. Limiting program benefits is ultimately a limitation on theproducers' ability to support themselves and their ruralcommunity.
A recent theme for those who want to limit thesupport provided to larger operations is to limit marketing loan benefits.Limiting marketing loan benefits is virtually impossible to do fairly. Mycounty is an excellent exampleof why a hard and fast limit will not work. Since 1977 Yoakum County cottonyields ranged from: 5 to 610 pounds on non-irrigated and from 198 to 976 poundson irrigated. It's a pretty wide range andillustrates why a limit on how much production can be put in the loan or an overly restrictive paymentlimit on LDPs is so detrimental. During this time LDP payments for my operationcould have ranged from over $600,000 down to $25,000 depending on marketconditions and production levels. As with any farming operation the good years are what help me throughthe bad years. Ahighly restrictive limit on loan eligibility or LDPs puts a cap on my abilityto do that.
Recently Senator Charles Grassley was quoted sayingthat producers have no control over the pricesthey receive or the national loan rate and therefore have no control over theLDP rate that they are paid on the crops they produce. My lack of control, as aproducer, over the rate of payment and the yield of a crop in any single yearmakes strict limits onloan eligibility and LDPs impractical.
Another serious side effect of limiting loanbenefits to a portion of a grower's historical production isthat it significantly reduces the cropping flexibility that the current programprovides. A grower withlittle or no history of producing a crop would have significantly less abilityto gain loan protection for an alternative crop and would simply plant crops heknows will be loan protected regardless of what the market tells him.
Secretary of Agriculture Johanns recently hinted the Bush Administrationmay call for an end to marketing loans for crops because so many in the WTO areopposed to them. I am deeply concerned over this suggestion as well as therecent US proposal to cut 60 percent of our domestic support in return for market access. From mystandpoint, doing away with the marketing loan is out of the question, and thepromise of market access gains provides very little benefit to US cottonproducers.
In 2005 a record 23.5million bales of cottonwere produced in the US and exports of 17 million bales are predicted. Despiteits size, this record US crop doesn't even meet the total cottondemand of US consumers who use over 24 million bales equivalents of cottonproducts. US cotton producers and importershave invested millions of their own dollars to develop the US market throughcomprehensive research and promotion program. This year we will spend $73million of producers' money on those efforts. UScotton producers worked to build this market and my question is what'swrong with those same producers growing 23.5 million bales when the US consumeruses over 24 million bales of cotton products.
In following the development ofthe current WTO negotiations it is clear to me that the WTO has accepted the argument that the UScotton program is responsible for the poverty of African cotton farmers. Allowing US cotton to be singled outfor early harvest of our domestic safety net through deeper cuts and anaccelerated timetable for implementation is a precedent we cannot allow. Mr. Chairman, you and theother members of the House Ag Committee cannot allow this to happen. It isimperative that WTO agriculture trade policies be considered as a singleundertaking and equally important that a compliance assurance provision be reinstatedin any new WTO agreement. Without such a provision werun the risk of allowing a repeat of the Brazil cotton situation whereestablished US farm policy was ruled illegal even though it was acceptable tonegotiators when the lastWTO agriculture agreement was developed.
I trust as you write the next farm bill that youwill work with producers like me to keep US agriculture an important part ofthe US economy. In the end it is up to you to make sure the next US farm billis written inWashington by Congress and not modified or dictated by those not involved inU.S. agriculture.
In summary, key parts of a new farm bill shouldinclude:
- Marketing Loans – all production eligible, a coupled payment
- Direct and Counter-cyclical payments – a decoupled payment
- Improved crop insurance
- Permanent disaster program
- Conservation programs on a voluntary cost share basis
- Public-private marketing development programs
- Ag research at all levels of the agriculture industry
Again, thank you for the opportunity to testify today. I would be pleasedto respond to your questions at the appropriate time.