LARRY COMBEST, TEXAS, BILL BARRETT, NEBRASKA, VICE CHAIRMAN JOHN A. BOEHNER, OHIO RICHARD W. POMBO. CALIFORNIA TERRY EVERETT, ALABAMA HELEN CHENOWETH, IDAHO JOHN N. HOSTETTLER, INDIANA SAXBY CHAMBLISS, GEORGIA RAY LIHOOD, ILLINOIS JERRY MORAN, KANSAS BOB SCHAFFER, COLORADO JOHN R. THUNE, SOUTH DAKOTA WILLIAM L. JENKINS, TENNESSEE JOHN COOKSEY LOUISIANA KEN CALVERT, CALIFORNIA GIRL GUTKNECHT, MINNESOTA BOB RILEY, ALABAMA GREG WALDEN, OREGON MICHAEL D SIMPSON, IDAHO DOUG OSE. CALIFORNIA ROBIN HAYES, NORTH CAROLINA ERNEST L. FLETCHER, KENTUCKY U.S. House of Representatives Room 1301, Longworth House Office Building (202) 225-2171 (202) 225-0917 FAX March 2, 1999 CHARLES W. STENHOLM, TEXAS, RANKING MINORITY MEMBER MIKE THOMPSON, CALIFORNIA WILLIAM E O'CONNER, JR STAFF DIRECTOR Attached is a revised copy of the Committee on Agriculture's letter with respect to the fiscal year 2000 budget for the agencies and programs under its jurisdiction. The Committee met on February 25, 1999 with a quorum present and approved the attached letter. This letter was in fact sent on March 1, 1999. However, on March 2, 1999, the Committee was notified by a Member of his intention to submit additional views for inclusion. Therefore, the letter is being resubmitted with additional views. If you have any questions with regard to this matter, please feel free to contact me at 5-0025. Attachment www.house.gov/agriculture Pursuant to section 301(d) of the Congressional Budget Act of 1974 and House Rule X, The Committee on Agriculture continues to monitor the progress of the 1996 Federal When the FAIR Act was passed, the agricultural community was promised that this far- www.house.gov/agriculture Hon. John Kasich Page 2 positive and substantial first step, it has yet to affect farm finances and more remains to be done on this, and other fronts. Unfortunately, the general economic situation facing farmers and ranchers today is drastically different than it was during consideration of the 1996 Farm Bill. There are many reasons for today's current agricultural economic situation including a decline in exports, particularly in the Pacific Rim nations, significant natural disasters that have wreaked havoc on producers in many areas, and falling prices coupled with increases in the cost of production. Though the remainder of the domestic economy is booming and the Federal Government is enjoying budget surpluses, the food and fiber sector is struggling. This has significantly increased the economic pressures on all parts of the agricultural sector including lenders, input suppliers, producers, and entire communities in rural America. Analysts are projecting continued low commodity prices for the upcoming year. Credible observers are suggesting that commodity prices will continue to drop. Even beyond the next fiscal year, most analysts are not optimistic that the general economic situation for farm commodities to improve until the world trade situation improves, which could take anywhere from 2 to 5 years. Farmers and ranchers understand and accept the cyclical nature of their livelihood. However, they need tools to help survive the unpredictable, and sometimes severe, economic downturns. One of the biggest obstacles in this area is the lack of access to more effective risk management tools that producers can use. The lack of a viable, national risk management policy for agricultural producers was an underlying cause for Congress having to provide a $5.9 billion ad hoc assistance package-spending that was outside of the normal budget process. If Congress is to avoid facing repeated requests for short-term ad hoc assistance for farmers, a prudent investment in risk management improvements is needed now. This chronic problem needs to be addressed two ways: first, some short-term improvements need to be made to current risk management policies; and second, a sustained effort to develop an effective, fiscally-responsible risk management policy so that our nation's agricultural sector can remain competitive into the 21st century. It is vital that some short-term risk management improvements occur this year. For fiscal year 2000, this Committee is considering several additional changes to the risk management system that will allow it to be a more effective tool for producers. The Committee is currently developing a range of options, with careful attention about the cost to taxpayers and the benefits to producers. Recall that last year, the Appropriations and Agriculture Committees, along with the Administration, recommended shifting all crop insurance costs to mandatory spending. Hon. John Kasich Despite the fact that, in reality, this was simply a shift from discretionary to mandatory spending, the "paygo" provisions of the Budget Act, along with CBO's scoring methods, reflected this as being a cost of $1.03 billion for fiscal years 1999 to 2003. While it was a difficult process, this goal was achieved without requiring additional budget outlays and by realizing savings of over $500 million through program reforms. The capability to realize these kinds of savings has been exhausted. U.S. agriculture is counting on Congress to follow through with a renewed commitment to expanding agricultural trade opportunities, reducing regulatory burdens, and providing tax relief. At the same time, because the food and fiber sector continues to suffer while the rest of the domestic economy thrives, it is critical that we now make some prudent additional investments in our risk management system. We look forward to working with you on this important issue. |