CHAIRWOMAN STABENOW: I'll turn now to Senator Johanns, and first say that on this committee we have former chairmen, former ranking members, and we're very fortunate to have a former Secretary of Agriculture.
Let me just note that when Senator Johanns was Secretary of Agriculture, he talked about reforming conservation. We have taken a number of your ideas. You really gave us a basis for thinking and for moving ahead. I think we have a terrific conservation title. You deserve a lot of credit for giving us a lot of ability to get started. I want to particularly thank you for that.
SENATOR JOHANNS: Well Madam Chair, thank you very much for that. I appreciate you using some of those ideas, and what more can I say in appreciation to you and to the Ranking Member, you've both done a great job.
I will offer an insight that writing a farm bill from this table is a lot different from writing a farm bill in the office of the USDA.
The great thing about this committee is there's such deep experience. You look at this committee, virtually everybody here has great ag background. They've either chaierd this committee or served as Ranking Member. It's been very very helpful in fleshing out my ideas as I thought about this package.
I'm in the camp of saying "Let's move forward." I'm going to support your efforts today because I do believe it's a great first step and we need to move this process along.
A couple of thoughts I would offer.
The ag economy has experienced a remarkable few years here. It is really stronger than it's ever been, in some aspects it's historically strong. In recent years many producers have seen the opportunity to feed people or provide clothing or fuel in parts of the world that they probably would have never imagined.
As a result of that we've seen farm income reach a record $98 billion, with very low debt-to-asset ratios. I'm often asked 'Are you concerned about what happened in the 80's, in terms of could it happen today?'
Sure we always have that concern. But having said that, farmers tend to business, they've kept their debt reasonable, they've kept it low and they've really tended to the business that they run.
But at the same time we all recognize, including our farmers and ranchers, that our nation's budget situation is more daunting than ever. With our country's total national debt over $15 trillion the government is now borrowing about 42 cents of every dollar [spent].
This farm bill though, like no other committee that I'm aware of, has taken on the responsibility of providing deficit reduction, and as you and the Ranking Member have pointed out, this farm bill saves at least $24.7 billion. You can only imagine if other committees would accept the same responsibility how big a step we would take in dealing with our deficit issues.
But in this package, like every piece of legislation there's probably some things I like, there's probably some things I don't like, that definitely is true.
I'm not a fan of target prices and reference prices. People ask, 'Why is that?' I'll share a story with you.
I was Secretary of Agriculture when Katrina struck. Devastating impact. Part of the impact of Katrina was that for a period of time, the shipping lanes down the river, the Mississippi River, were blocked. We all knew that was temporary. We all knew that work was going to start just as soon as the wind stopped blowing to move the items that had sunk and the ships and get that shipping lane opened up.
But in a very brief period of time, the price of corn dropped from about two dollars a bushel to a dollar-sixty a bushel. What happened? Perfectly legitimately, everybody locked in their loan deficiency payment. $4 billion went out the door at USDA almost overnight. Now we knew that was a very temporary time and prices in fact came back to that two-dollar level. Hard to imagine these days when we have such higher prices than that.
What am I saying? I'm just saying that when you set targets then you are basically sending into the marketplace a direction as to how to utilize that target. At the end of the day, the loan deficiency payment was paid out, the farmer continued to own the commodity, and at the end of the day really suffered no loss except in rather unusual circumstances.
What I have heard and what I think members of this Committee have heard is the crop insurance plan offers the best opportunity to go to a more market-oriented farm bill. I just want to wrap up today by applauding you and the Ranking Member, and so many members of this committee for recognizing that. I think it's a significant step in the right direction for farm policy and I applaud your efforts.
Thank you, Madam Chair.