by Patrick J. Buchanan – August 9, 1999
The Principle Group – Des Moines, Iowa
For many Americans, these are the best of times. Unemployment and interest rates are low, prices are stable, and on Wall Street the bulls have been running wild. But not everyone is marching in the great parade of American prosperity.
Look past those brimming silos and fields of corn, and you’ll see a harvest of heartache in the heartland of America. Those silos store last year’s crop that was packed in because prices were too low to turn a profit. As for those full fields, some of that crop may rot on the ground because farmers can’t afford to harvest it.
This year, the price of cotton is down 46%; wheat prices are off 61%. Corn has reached the lowest price in two decades, and soybeans that sold for $8 a bushel three years ago bring just $3.50.
The specter of depression haunts the farmlands of America. But this crisis is different. It has struck Iowa when the growing conditions are good and farmers anticipate a record soybean harvest and the third greatest corn crop ever. The problem is price.
The Asian economic disaster that spread to Russia and Latin America sent foreign demand for U.S. farm products crashing 40%. Desperate to offload their own subsidized oversupply, countries began dumping into the U.S. market. Invoking the Global Economy, Mr. Clinton refused to take action. America’s farmers are paying the price, as are implement companies and hardware stores, coffee shops and car dealerships across the great American breadbasket.
Washington and Wall Street may believe it inevitable that the family farm must pass away. But, as a conservative, I believe that family farms and rural towns must be conserved. So, today, I offer this ten-point pact, a Bill of Rights for the Family Farm: First, I will, as President, abolish all inheritance and capital gains taxes on family farms. Americans over the age of 55 own half of our farmland. But inheritance taxes prevent these farmers from bequeathing a birthright to their children.
When I was here in Iowa in 1995, I visited a farm in Ida County where the Paulsrud family had lived nearly a century. Like many of their neighbors, their grandparents had started with a small plot, farmed it, added buildings, and bought nearby land. Their son did the same, building up and adding on. By 1995, the Paulsrud family had 2,000 acres worth about $1,500 an acre. When I spoke to that elderly farmer, he told me he dreamed of passing the farm on to his son. But his son couldn’t buy it because of the capital gains taxes. And if he died, his son would have to pay a federal inheritance tax of 55% — a million dollars. Where would an Iowa farmer get that kind of money? Only by selling that family farm that had been cobbled together over a century. It shouldn’t work this way in America.
Second, we must repeal NAFTA. Since NAFTA passed, U.S. agriculture imports from Canada and Mexico have increased 57%, and our agriculture trade surplus with the two countries has shrunk by two-thirds. Stand on our northern border and you’ll see four times as many head of imported cattle heading south as you did a decade ago. 2000% more spring wheat. Seven times as many hogs.
Move to the southern border and you’ll see Mexican trucks hauling the tomatoes that have cost Florida farmers $1 billion in lost revenue, or the strawberries that infected 270 Americans with Hepatitis A in 1997. This is the fruit of a NAFTA trade deal that failed to consider the possibility that our neighbors would cheapen their currencies to take unfair advantage of American farmers.
Now, make no mistake: I am not against trade. I believe we must take aggressive action to open overseas markets to U.S. farm products. But we must stop unilaterally throwing open our markets to Japan, China, the Pacific Rim and the EU, when they deny us free and fair access to their markets. Over the past decade, we’ve courted the Chinese with trade privileges and unrestricted imports at the cost of a $60 billion annual trade deficit. Meanwhile, Beijing has slashed U.S. farm imports by $100 million, and slapped 40% tariffs on U.S. agricultural products.
Why do not Republicans stand up to the Beijing regime, and stand up for the American farmer? Those Republicans, like Mr. Bush and Mr. Forbes, who have embraced the Clinton-Gore policy of appeasing China with Most Favored Nation trade privileges bear equal responsibility for the Iowa farms that today hover on the brink of bankruptcy.
Mr. Bush, Mr. Forbes and Mrs. Dole now say we must open foreign markets. But when you have unilaterally given up total access to your own market, what leverage do you have left to pry open the protected markets of Europe, Asia and Latin America?
Mrs. Dole says the road to prosperity for American farmers lies in giving “fast track” authority to Bill Clinton. But fast track is the surrender by Congress of all rights to amend trade treaties. Why should a Republican Congress sign a blank check to a Clinton-Gore trade team that this year will amass a $325 billion merchandise trade deficit-equal to 4% of our Gross Domestic Product?
The Clinton-Gore team is the most incompetent collection of trade negotiators this continent has seen since the Indians sold Manhattan for twenty-four dollars worth of baubles and beads.
Critics call me a protectionist. But if our trade laws are not there to protect Americans who are they written for? Today, the price of virtually every farm commodity we produce-hogs, corn, beans, cattle, wheat, apples, milk, cotton — has fallen below their cost of production. When that happens, imports kill farms.
If prices remain at these levels for any extended period of time, every family farm in this country will face bankruptcy and ruin. Therefore, as President, I would impose this policy: Whenever the price of a commodity falls below the cost of production, we stop importing that commodity into the United States, to save our family farms. It is time Republicans and Democrats both put the American economy before the Global Economy and America’s farmers ahead of the claims of any and all foreign regimes.
Third, I will abolish the IMF and end these taxpayer bailouts of foreign competitors of U.S. farmers.
Twenty years ago, we produced 70% of the world’s soybeans, Brazil 5%. Today, our share has fallen to 47%, Brazil’s has risen to 20%. And Brazil has lately cleared 150 million new acres for soybean production. Yet, in 1998, the U.S. led a $41 billion IMF bailout of Brazil, which then devalued its currency by 40%, giving Brazilian farms a new 40% price advantage over Iowa farmers. Thus, via the IMF, are U.S. citizens forced to subsidize the destruction of Iowa farms. Last year, the World Bank lent $10 billion to Asian countries, with promotion of agriculture the bank’s highest priority. These loans are guaranteed by U.S. taxpayers. Thus, via the World Bank, are Americans citizens subsidizing the destruction of Iowa farms. It is time to privatize the World Bank and abolish the IMF.
Fourth, I will stop using food as a weapon, and review all existing embargoes and sanctions of foreign countries. The denial of food does not hurt dictators; it hurts their subject peoples and American farmers, while our faithless allies rush in to fill the orders.
Fifth, I will enforce existing anti-trust laws to prevent the mega-mergers that are forcing vertical integration of American agriculture. In 1921, the Packers and Stockyards Act was passed in response to near 50% consolidation of the U.S. meatpacking industry by five packers. Today, five corporations control 89% of all beef processing. But rather than blocking the consolidation of these giant conglomerates, the federal government continues to approve mergers like the Cargill-Continental deal that concentrates 42% of U.S. corn exports, one-third of soybeans, and 20% of U.S. wheat exports in the hands of a single transnational corporation.
Family farms cannot compete against transnationals that fix prices by closed contracts, leverage trade deals, secure tax benefits that are unavailable to independent producers, and operate branches of their empires at a loss until small competitors collapse.
Witness what industrialization has done to poultry: In 1940, 85% of farms raised chickens. Today, ten companies control two-thirds of the industry, with Tyson roosting on top with a 22% share of the market. From egg to chicken, total control of the production process belongs to corporations with no stake in local communities.
A June USDA report states that, “The poultry industry models the type of business organization that may characterize U.S. farming in the future.” Farms turned into factories controlled by far away investors-with farmers as assembly-line workers-is this what the first American farmers envisioned?
Sixth, just as resisting consolidation will encourage fairer competition, so, too, will requiring price disclosure. Last year, when pork producers were getting eight cents a pound — $20 for a hog that cost $75 to raise, IBP, the country’s second largest pork processor, reported quadrupled earnings in the fourth quarter, and Hormel Foods enjoyed the most profitable year in its 107-year history. While bankrupt family farmers were shooting hogs or giving them away, giant hog confinements were cashing in on contracts with packers willing to pay premium prices for large shipments. By law, processors only have to reveal the prices they pay on the open market; contract prices are private. So the family farmer with his perishable commodity and single community buyer is not only being muscled out by the mega-producer. He must also contend with an anti-competitive producer-packer partnership that makes basic pricing privileged information.
Seventh, just as I support the independence of the family farm, I support a policy of U.S. energy independence that includes a strong stand for ethanol. This industry creates 40,000 jobs, adds $12 billion in net farm income each year, and decreases the demand for foreign OPEC oil. Here in Iowa, with the move on to ban MTBE, ethanol’s chief competitor, the expanded market for ethanol could add 50 cents a bushel to the price of corn.
Eighth, saving the family farm will require a rewrite of the Endangered Species Act so that Congress is forced to vote on every species that is listed as endangered. Let me tell you about the Domenigoni family in Winchester, California. They’ve lived on the same land for over a century, but recently the endangered Stephens kangaroo rat took up residence on their ranch. The feds found the rats, and forced the family to idle 800 acres at a cost of $400,000.
The Domenigonis were not compensated, and after they were forbidden to use farm equipment to build firebreaks, 25,000 acres were scorched by wildfires. The rats perished, but not before they took that family’s livelihood with them.
Ninth, we should exempt family farms from OSHA and begin a regulatory revolution to restore sanity to federal regulation. I will impose a moratorium on new regulation, require a sunset provision of five years on all regulation, and institute a defined annual cutback in paperwork for family farms.
Tenth, we must restore farmers’ property rights under the Fifth Amendment and end the regulatory theft of property rights without just compensation. In Forest City, here in Iowa, when the Johnson family tried to install drainage on 36 acres of their farm, a federal judge declared it a protected “wetland.” The Johnsons were threatened with jail time and fines of $25,000 a day, unless they spent their own money to turn the farmland into an eco-preserve. Enough is enough: Private holdings are not public habitats, and unelected bureaucrats must not be allowed to force citizens to cede their property without due process and just payment.
I want to close with a story. It started 120 years ago when Terry Naas’ great-grandfather staked out a homestead in Nelson County, North Dakota, and sank deep roots into this soil. He didn’t have much to bequeath to his son, but by the time Terry’s father took over, the Naas family farm had grown to 3,000 acres.
This year, Terry planted wheat, barley, and sunflowers, but the land farmed by his father and uncles won’t provide enough for his wife Karen and their two young children. Last year, they moved 55 miles away so Karen could work at the Post Office. As he commutes back to his family’s farm each day, Terry struggles with the same dilemma facing many American farmers. “You can’t afford to keep going, but you can’t afford to quit,” he says. “After 120 years in the family, you hate to be the one to end it, especially when it’s all I’ve thought about for the last 30 years. It’s all I ever wanted to do, but am I the one to end it?”
In 1785, Jefferson wrote to John Jay that America’s farmers were our “most vigorous, most independent, most virtuous” citizens, who are “tied to their country and wedded to its liberty and interests with the most lasting bands.”
We must keep faith with these Americans, by ensuring that their dreams are not buried beneath dumped imports, or plowed under by transnational corporations with no allegiance to anything but their own bottom line. Family farmers are not begging for federal handouts. Proud, hearty stock, they have, for love of the land, weathered droughts, overcome disease, and outlasted depression. They simply want their labor to be valued, their products to be competitive, and their own government to take their side in the global marketplace. America’s farmers are asking nothing more. They deserve nothing less.