Senator Amy Klobuchar

Working for the People of Minnesota

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Klobuchar Hails Progress on Farm Bill

December 7, 2007 | Watch

Mr. President, I first want to acknowledge the great leadership of Senator Harkin and Senator Chambliss on this Farm Bill.  I'm proud to be a member of the Agriculture Committee and to be involved in this forward-looking Farm Bill.  I also want to thank the many authors that we have on this amendment that I'm going to speak to today, including Senator Durbin and Senator Brown, both of whom were in here in the last few minutes. 

This amendment includes some reasonable income-eligibility limits for subsidies under the Farm Bill.  The focus of this amendment is to make sure that the subsidies and the safety net in the Farm Bill goes to the people who it will most help, and that is the family farmers of his country.  Not to real estate developers in Florida or art collectors in San Francisco. The focus here is on family farmers throughout this country. 

Mr. President, America's farm safety net was created during the great depression as an essential reform to help support rural communities and protect struggling family farmers from the financial shocks of volatile weather and equally volatile commodity prices. Almost 75 years later, the reasons for maintaining that strong safety net still exist.  The 2002 Farm Bill has spurred rural development by allowing farmers in Minnesota and across the country to take risks to expand production.  Because of productivity gains and innovation, including advances in renewable energy, the farm support programs in the 2002 Farm Bill are projected to come in past $17 billion under budget. 

So as we debate the current Farm Bill, as we will in the coming days, it is important not to underestimate the value of a strong bill to our country, to agriculture, to the rural communities throughout this nation.  That's, why as a member of the Senate Agriculture Committee, I strongly supported this Farm Bill and voted for it.  It includes an increased focus, as the chairman mentioned, on cellulosic energy, and additional funds for conservation and nutrition.  And of particular importance, the country should know that we've balanced our budget in this bill with every dollar of new spending fully offset.  So there are a lot of good things for Minnesota and the rest of the country in this farm bill.

There is, however, one critical area where I believe we could do some more reform and that is to make sure that urban millionaires do not pocket the farm subsidies that are intended for our hard-working farmers. Here are the facts in my state: Minnesota is the sixth-largest agricultural state in the nation.  Nationally, however, 60 farmers have collected more than $1 million each under the 2002 Farm Bill.  None of those farmers
are in my state.  The top 20 business recipients in the country have each gotten more than $3 million under this pail Farm Bill yet the average income of farms in Minnesota is $54,000 after expenses. But under the current system, a part-time farmer can have an income as high as $2.5 million from outside sources and still qualify for federal farm benefits.

I do not believe that we should be handing payments out to multimillionaires when these payments should be targeted to family farmers. Big payments to big-city investors threaten to undermine public support for the farm bill as a whole, even though people should know that the commodity programs are projected to be just under 15% of the total farm budget over the next five years.  Now, a poster boy of what needs to be changed is Maurice Wilder, is the nation's top recipient of farm payments.  Not conservation payments, but commodity payments for properties in five states even though his net worth is estimated to be $500 million. He is not a farmer. He's independently wealthy. He's a real estate developer, and he should not get the government checks. We have examples all over the country of people who have been getting checks from David Letterman to Paul Allen.

But the problem doesn't stop with the extremely wealthy. Checks that are intended for farmers are being sent all over urban areas. Since the enactment of the 2002 Farm Bill, $3.1 million have gone to residents in the District of Columbia. $4.2 million has gone to people living in Manhattan and money has gone to Beverly Hills, # 90210. Last time I checked, there was not a lot of farmland in these communities.  We can do better by using the Farm Bill to close loopholes and tighten payment limits and force tougher income eligibility standards.

Again, I am a strong supporter of this Farm Bill. I believe the 2002 Farm Bill did wonderful things for our country in terms of revitalizing the rural communities. What we want to do is build on the 2002 Farm Bill. Here's one thing that was already fixed in the bill that came out of our committee and what is the three entity rule. The current Senate and House Farm Bill, and this has actually gone through the House floor, those proposals eliminate the three entity rule. This will cut down on abuse by applying payment limits strictly to individuals and married couples and ending the practice of dividing farms into multiple corporations so that they can multiply payments. Second, as has been already mention by our chairman, the longstanding amendment proposed by Senators Dorgan and Grassley would limit annual payments to $250,000. This amendment would bring meaningful limits to the marketing loan program and close enormous loopholes that allow millions of dollars to float to individual recipients under the current law. 

I support the Dorgan-Grassley amendment, and I urge my colleagues to do the same.  I believe a third kind of reform is also needed.  Congress should act to prevent payments that are intended for hard-working family farmers from going to urban millionaires.  We can do this by placing reasonable limits on the incomes of people in businesses who participate in the commodity program. Under current law, if you are not a full-time farmer, meaning that less than 75% of your income comes from farming, you are eligible to get commodity payments as long as your adjusted gross income is less than $2.5 million per year. Again, this is part-time farmers under current law. 

Let's figure out what that means.  Can you live in the city, have a job as an investment bankers, make $2 million, get checks if you own shares in a farm.  If you're a full-time farmer or corporation, meaning that more than 75% of your income comes from farming, under current law there is no limit on how much net profit you can have in a given year and still get farm payment. What we're talking about here is expenses are deducted for us to get to the numbers. Even with the expenses deducted, you can make for part-time farmers, $2.5 million per year and there is no limit for full-time farmers and you're still eligible for these subsidies. It also means that mega farmers can bring in untold dollars of this revenue and still get these kinds of payments. This flies in the face of common sense. It is against the intent of Congress and given rise along with the two other amendments that I support, ones that already in the bill.  One that we will consider, the Dorgan-Grassley amendment, and this one will allow us to address these that have given rise to scandals. I have been pushing for this. I'm glad that we reached an agreement on a total number of amendments so that we can move forward with this amendment next week. I'm offering this amendment along with Senators Durbin, Brown, we have many other Senators' interested in this. To place reasonable limits on the incomes of those who receive farm payments.

Here's how this amendment works. If you're a full-time farmer, meaning that more than two-thirds of your income comes from farming, you can participate in the farm programs, and you can get the subsidies as long as your income after you deduct the expenses does not exceed $750,000.  If you are a part-time farmer, or farm investor, and you have substantial sources of income off the farm, you can participate in the farm programs if your income does not exceed $250,000.  It is that simple. 

Now, I'll note that it is somewhat similar to the reforms that the house enacted off the floor in their bill. Their amendment puts it at $1 million for a full-time farmer and then $500,000 for a part-time farmer. Right now the bill that came out of the Senate committee places no limits on the income of full-time farmers, and then places a limit on a part-time farmer at $750,000.  What we're doing here is trying to put the limits at $750,000 for a full-time farmer, $250,000 for a part-time farmer.  This is an original proposal from the administration that lumped full time and part-time farmers together.  I think that this makes more sense having talked to farmers in my state and across the country. 

Some of my colleagues have said to me that $750,000 is too low, that some costs have a high cost of crops, have a high cost of production, and that they need a higher income.  Again, I want to remind my colleague that's the income limit is applied after your farm expenses are deducted, including all of your labor, your equipment, your fuel, and your fertilizer. We're talking about how much profit you have made at the end of the year. If you own a farm that has netted $1 million in a single year after all of your expenses are paid, I salute you. That is wonderful. There is nothing wrong with that.  I would love it if every farmer in Minnesota had $1 million in year.  If they did, this amendment say us that can't get the subsidy. If you have $750,000 income, if you're full time, $250,000 if you're part time, you would be eligible. 

Some of my colleagues said that $250,000 on part time farmers is too low. Again, I say if you live in the city and own shares on a farm and have a substantial source of income outside of farming that puts you over $250,000 a year, that's great. That's a good thing. Lots of Americans would love to be in that position and have that problem. But they do not necessarily want to provide their tax dollars to give subsidies for these people who are living in Beverly Hills 90210 or New York and simply have investments.  I believe the vast number of Americans don't believe that's where the subsidies should be going. They should be going to the family farmers who are facing the volatile weather, volatile prices that could basically put them under. We don't want to have that happen, not only for our economy, but for our national security, we must have farming and we must have a strong agricultural sector.

In conclusion, I want to say that the intent of this amendment is to strengthen the Farm Bill. All Americans have a vital stake in the fortunes of our farms and our rural communities.  Agriculture remains central to our rural economy, especially our prosperity in the global marketplace.  That's why I support this agriculture bill, this Farm Bill, this basically national security bill.  And I intend to support it.  I supported it out of the committee and I intend to support this bill when it comes to a vote. 

But it's not enough to have the support of just the farm state Senators.  I believe it is important to have the support of this entire country. We need this kind of reform because we need to have support from the entire country if we want to pass this bill.  You know, inertia may be the most powerful force in the political universe, but after 75 years, the best interest of rural's economy demand that we correct the abuses of the past so that we can move forward to ensure a strong safety net for our hard-working farmers.  I urge my colleagues to support my amendment and I ask, Mr. President, that the amendment be laid aside.

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