Stenholm Meets With Texas Ag
Officials, Offers His Outlook

By David Bowser

AUSTIN — One of the changes Rep. Charles Stenholm expects to see in the U.S. House Agriculture Committee this year is relevance — relevance on the part of the committee itself.

"The last four years, we've been irrelevant," Stenholm says. "By that I mean in the 1995-96 Farm Bill was not written by the House Agriculture Committee. It was written in the Speaker's office. It was a philosophical document as a result of the 1994 elections."

The politics of the farm bill indicated a change in direction, Stenholm says. The House leadership then dictated that the days of government involvement in agriculture should be over; the government was to be phased out over a period of seven years.

"Now that we're having a little experience with it, there are second thoughts as to whether or not that is a desirable policy," Stenholm continues. "As you look around the United States, there are very, very few in agriculture who believe this is good policy. If we unilaterally disarm our farmers in an international marketplace that is not ready to do the same, it is dangerous."

Stenholm, a Democrat representing the 17th Congressional District of Texas, is minority leader on the Agriculture Committee.

The chairman of the committee is Larry Combest from Lubbock.

Stenholm says to his knowledge it's the first time the ranking Republican and Democrat on the House Agriculture Committee are both from the same state.

"Not only are we from the same state and neighboring districts, Larry and I happen to be very good friends," Stenholm says.

It is apparent, Stenholm adds, that agriculture needs all the cooperation it can muster.

He was here recently to meet with the state agricultural and political leadership.

"The concept here is that it's going to be extremely critical that we have communication and cooperation between our state and federal efforts," Stenholm says.

The meeting, he adds, is only the second time in 20 years that he's sat with a state commissioner of agriculture and state leadership and talked about agriculture. He says the first time was about three months ago.

There are fewer and fewer legislators representing agriculture, Stenholm points out, at both the state and federal levels.

"One of the most difficult things for us in agriculture to come together and unite on is the recognition that things have changed politically," Stenholm says.

The major problem facing agriculture, he continues, is the lack of unity within the industry.

"We've got that problem within our own ranks," Stenholm says. "We'd better come to some agreement on what we're going to do or be prepared to take the consequences if we're not willing to work together as we must in this new environment."

There are differences of opinion as to whether government should be involved in agriculture, to what extent and how.

"The criticisms of those who believe that agriculture should not be subsidized are going to become more and more rampant," Stenholm predicts, and conflicting opinions within the industry will make it difficult for Congress to deal with agricultural issues.

"There's less than 500,000 producing 85 percent of the food and fiber in this nation," he says, and the number is still declining.

"Those who have survived have shown a greater and greater tendency to be willing to work together," Stenholm says. "Cooperation is the name of the game. Unless we are will to work together, cooperate like we have never shown a willingness to do — 'we' meaning individual producers and those who purport to represent us — unless we are willing to work together in ways in which most have said impossible in the past, we won't solve any of these problems."

He says that while that is his personal opinion, it is based on what he sees happening in the nation's capitol.

"I can't see any other viable answer to price other than producers cooperating together, cooperating in the traditional sense which we all understand — cooperative — farmers owning our own from the field to the consumer," Stenholm says.

"More and more of that is beginning to show up, but there's a second field of cooperation that also must be pursued. That's reaching out to corporate America, those who are in fact consolidating."

There is concern about a concentration of packers, a concentration of seed companies, a concentration of bankers.

"Unless we're able to find ways through strength ourselves to work with corporate America, we won't get there either," Stenholm says. "There are some real opportunities for us there, and we've already seen some signs."

Corporate America is beginning to recognize that they must find some way to get more of the consumer's dollar into the producer's pocket.

Stenholm cited a story in the Washington Post a few weeks ago concerning commodities. The story, he said, claimed that both producers and consumers were losers. It was the processors who were the winners, those who added value to raw commodities.

"This morning I had a bowl of corn flakes," Stenholm says. "I like corn flakes, but last December, Kellogg's said they had to increase the price of corn flakes 2.7 percent to meet increased marketing cost and increased advertising cost. In many boxes of cereal, the big boxes in particular, half the cost is advertising.

"I wonder how long we are going to permit corporate America to pay outlandish salaries to golfers and basketball players and football players and movie stars and charge the consumer back double the price what the corn is worth? I wonder how long we're willing to do that, but we're perfectly willing to do it."

The approach, politically and economically, concerning agriculture will have to change, he insists.

Trade is an example. International markets need to be expanded, and producers protected from financial collapses in developing countries.

"When our buyers don't have money to buy, we don't sell," Stenholm points out. "That is a major, major problem for us. Agriculture has to figure out how to compete in a consolidated marketplace if we continue to insist on being individuals."

The only direction Stenholm sees for agriculture is more cooperation, both internally and with food processors and marketers.

"I think you're going to see more and more marketing clubs," he says. "You're going to see more and more pooling. You're going to see more recognition as we listen to those who advise us to recognize that somehow, some way we have got to pool our selling resources to meet the strength of the buying resources."

Agricultural leaders from different sectors are going to have to get together and present a united front, he insists. Otherwise, he says, agriculture will face the same problem it has now in Washington.

"The budget that the House and Senate have passed and that we are to live on is a disaster for agriculture," Stenholm opines.

"The budget that passed the House and the Senate was designed to do one thing and that was to appease those who believe the one thing we need in America is a tax cut. If you believe that, fine — I don't quarrel with you — but I don't believe that.

"I happen to believe that most farmers and ranchers, most small businessmen and women in this state think the one thing we need most is to keep interest rates down, not a tax cut. If you're not making money, tax cuts do not help you. From an agricultural standpoint, if we're not making money, why do we believe the most important thing in life is to have a tax cut?"

But the budget is about to be thrown out, he says, and negotiations will begin again.

What the so-called "Blue Dog Democrats," of which Stenholm is one, have proposed and the administration is listening to is a budget that revolves around five priorities that need additional money: defense, agriculture, veterans, education and health.

"Let's take half of that projected surplus and apply it to the debt, along with all of the Social Security trust fund," Stenholm says. "Pay the debt down.

"Twenty-five percent of the surplus should be spent on those priority items," he continues. "The last 25 percent could be used for a targeted tax cut."

But what kind of tax cut?

"An investment tax credit for agriculture would be positive," Stenholm suggests. "It would be a help because so much of our equipment is getting older and older."

Stenholm also proposes 100 percent deductibility of health insurance for small businesses, farmers and ranchers.

"Those would be the most positive tax cuts we could have," he insists. "They fit within the budget."

Another area in which Stenholm thinks the government should be involved with agriculture is working with agricultural banks and production credit associations to make sure producers have access to credit.

USDA recently rethought their agricultural lending policies and revamped the preferred agricultural lenders program. Now more banks are available to participate using government guaranteed loans.

Stenholm says it's going to be up to those lending institutions to make sure the program works.

"I told them, 'Look, I'm going to take your word for it,'" Stenholm says. "'I believe you. I know you're not crooks. I know too many of you in my own district. But if it turns out that one of you is a crook, I'm going to buy the horse, select the tree, buy the rope and slap the horse.'

"That's the way we've got to be on this preferred lender program. If there are a few banks and PCAs that find they've got a bad loan and they shift 90 percent of it onto the federal government, then they should pay the price. It's against the law. But that shouldn't be a reason not to do it."

Stenholm says opening up export markets is also a key role for government, as is ensuring some sort of safety net for producers.

"What I would like to see is a program that would allow an efficient producer to come back next year if the worst happens," Stenholm says.

One of his biggest worries is the fate of the various checkoff programs.

"This is one that worries me," Stenholm emphasizes. "When we producers are hurting, it is very easy to come to a rational conclusion that I can't really afford to pay X-dollars to whatever commodity checkoff program I may be in. I hope everybody understands that if we start pulling back our willingness to fund the original seed dollars, if we show by our own votes that we no longer can afford or want to help ourselves with checkoffs, we're going to be in deep trouble."

He says the state and federal governments are going to have a difficult time finding the budget dollars if agriculture starts sending a message to the rest of the country that it is not interested in helping itself.