Montana Farmers Union

Testimony of Alan Merrill

Before the U.S. Senate Agriculture Committee

 Field Hearing

Monday, July 2, 2007

Great Falls, MT

Senator Baucus, Senator Tester and members of the committee:  Thank you for the opportunity to testify today on Farm Bill possibilities for Montana’s agricultural producers.  My name is Alan Merrill, and I am President of the Montana Farmers Union.  I want to thank you for holding this hearing in Montana.  We look forward to working with you on the development of this important 2007 Farm Bill.

As you may know, Montana Farmers Union is an organization whose policies originate from the ground up.  Our producer members develop our policy every year at our convention.  I am happy to relate their concerns and goals to you today.

One of the first statements in our program and policy charges our board to work to promote a price balance between sales and cost of farm operations.  Our members believe a priority for the new farm bill should be profitability.  I don’t know a farmer or rancher who doesn’t want to receive their income from the marketplace. 

In a nutshell, we believe that if the next Farm Bill includes the following provisions that farmers, ranchers and rural communities will be a part of an economic climate that will permit family-based agriculture to flourish.  These provisions include:

Ø      A farm income safety net that uses counter-cyclical payments indexed to the cost of production to support family farmers during periods of low commodity prices;

Ø      Full funding for the Conservation Security Program, and increases in the funding for the Natural Resources Conservation Service to assist farmers and ranchers in the development and implementation of conservation cost-share programs;

Ø      A strong nutrition title to help provide basic food and nutrition needs for all citizens in need;

Ø      A competition title that addresses current anti-trust practices and ensures anti-trust laws will be enforced;

Ø      A renewable energy title that makes energy independence a national priority – one that puts farmer, rancher and community ownership of renewable energy first; one that encourages value-added projects, including ethanol, biodiesel, and farmer and community-owned wind energy;

Ø      A farmer-owned Strategic Biofuels Feedstock Reserve tied to the needs of producers who use agricultural products, livestock feed consumers and food manufacturers, which protects against years of poor crop production;

Ø      A rural development title that helps farmers, ranchers, and rural communities develop economic opportunities for the betterment of rural America; and

Ø      A permanent disaster program, funded from the general treasury in the same manner as other natural disasters so that agricultural disaster assistance does not require “offsets.”

Fuels from the Farm

Renewable energy from farm-generated operations is one of the most exciting opportunities to happen in farm country lately.  Here in Montana we are enthusiastic about renewable energy opportunities, particularly wind and biofuels, which offer some new cropping opportunities.  One aspect of renewable energy that our members feel strongly about is that the economic benefits presented remain in our rural communities.  Many times we have seen large corporate investments in the state draw the wealth out with little or no reinvestment in the local economy.  We urge the Committee to ensure that USDA rural development and other programs that are developed for renewable fuels give a competitive advantage to farmer-owned and locally owned efforts.  In addition, when developing tax policy, we would also like to see similar incentives for farmer-owned and locally owned businesses.

A New Counter Cyclical Program with Permanent Disaster Assistance

A Change that Could Save Money

You have already heard from National Farmers Union about their counter cyclical proposal, but the Montana Farmers Union also would like to offer its support.  Just briefly, when it became apparent that the Committee and Congress are faced with crafting a new farm bill with significantly diminished resources, it looked like the current safety net would not exist.  NFU started looking at alternative safety net proposals that would cost less, but still provide the same level of support as the current commodity programs.  NFU commissioned an economic study that looked at adding a cost of production component, set at 95 percent of the cost of production, to a purely counter-cyclical safety net.

The proposal allows for increased input costs to be reflected in a counter-cyclical payment in the event that prices drop below a certain level.  It would guard, for example, against sharp increases in energy prices like we experienced in the past several years.

According to the economic analysis and modeling conducted by Dr. Daryll Ray, at the Agricultural Policy Analysis Center, University of Tennessee, the proposal would provide the same level of safety net as provided by the current farm bill, plus save $2 to $3 billion per year.  This level of protection and savings is achieved because it would only provide federal assistance if commodity prices are low, and would eliminate the direct, de-coupled, guaranteed payments of the current program, which are difficult to defend when prices are high;  and when prices are low, the direct payment isn’t adequate protection for producers.

The University of Tennessee study documents the amount of savings under this proposal could also provide the resources to fund a permanent disaster program and allow other saved resources to be used for high priority programs.  

Like NFU, the Montana Farmers Union thinks permanent disaster assistance is a critical part of an adequate safety net and should not be conducted in its current ad hoc fashion.  The counter-cyclical proposal combined with the permanent disaster component better addresses producer needs and still leaves financial resources available for such priorities as renewable energy, conservation, specialty crop producers, rural development and research.

Conservation Investments

Montana Farmers Union policy advocates for conservation funding to include soil, water, atmosphere and energy as a responsible economic investment in the future.  The Conservation Security Program is a great attempt to reward producers for conservation practices on working lands.  We support full funding of the CSP and adding continued enrollment for producers who did not qualify during the initial signup periods.

I would also like a take a moment to discuss MFU’s participation in the carbon credit trading program.  There is growing public concern about global climate change, and this program is one response.  The program is a voluntary, private-sector approach to conservation that allows producers to earn income in the carbon credit market for storing carbon in their soil through no-till crop production.  National Farmers Union acts as the aggregator of the credits for our members, and the credits are then traded on the Chicago Climate Exchange.

Livestock

Montana Farmers Union also represents livestock producers, and I’d like to take a moment to make a couple quick points:

First, MFU emphatically supports immediate implementation of country-of-origin labeling (COOL) with no statute changes.  In addition, we do not believe that COOL should be delayed while the debate continues around animal ID.  In addition, given problems surrounding the food supply for human consumption as well as for our pets, we urge Congress to strengthen our food safety oversight and inspection programs.

We also urge Congress to intervene and in the 2007 Farm Bill remedy the current non-competitive practices by requiring all federal agencies to enforce current antitrust laws.

Third, the development and control of a National Animal Identification System is a big concern, particularly producer liability, confidentiality and implementation methods.

And, finally, this past Legislative Session in Montana, Montana Farmers Union worked to have introduced a resolution that urges the U.S. Congress to allow the interstate shipment of meat processed in Montana from a state inspected and approved facility when state standards are equal to or greater than USDA standards.  We strongly believe that this change can broaden Montana’s packing industry and allow producers access to specialty markets looking for labeled beef.

And importantly, we do not believe that there should be hungry people when we have such a capacity to produce safe, nutritious food.  We support strong and fully funded nutrition and food programs at home and abroad.

In conclusion, we support a 2007 Farm Bill that helps farmers, ranchers and rural Montanans make a profit from the market.  We believe strongly in the opportunities offered from fuels from the farm. 

Mr. Chairman and members of the committee, again I thank you for holding this hearing in Montana and for the opportunity to testify.

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