Remarks of Mr. Bill Steel, President National Grange of the Order of Patrons of Husbandry "Perspective of the National Grange on the 2007 Farm Bill" presented at the North Carolina Agricultural Development Forum Governor Holshouser Building NC State Fairgrounds, Raleigh, NC February 1, 2007

Good Morning. On behalf of the National Grange I would like to take this opportunity to thank you for inviting me to discuss the 2007 Farm Bill. I am honored to have a few moments of your time. For those of you who are not familiar with the National Grange, we are the nation’s oldest national agricultural organization, with 2,800 state, county, and local grassroots chapters in 37 states. Grange members provide service to agricultural and rural communities on a wide variety of issues, including agriculture policy, economic development, energy security, education, family endeavors, and legislation designed to assure a strong and viable Rural America. Over the past 140 years, the Grange has evolved to incorporate the interests of non-farm rural families and communities as well as the traditional interests of family farmers and ranchers into our policy development process.

The National Grange supports the adoption of a 2007 Farm Bill that will stimulate interest and appreciation for an expanding and evolving agricultural industry. This morning, I’d like to share with you an overview of some of the forces of change in our society that our members have told us, through our grassroots policy development process, they believe will create challenges and opportunities in our rural communities that can be addressed in the 2007 Farm Bill and beyond.

Last September, the population of the United States reached 300 million people. This means that there are roughly twice as many Americans as there were in 1950, three times as many Americans as there were in 1900 and five times as many Americans as there were in 1867, the year the National Grange was founded. The reasons are many. Americans bring a new baby into the world every eight seconds and that baby is twelve times more likely to live to adulthood than a baby born in 1900. Average life expectancy has increased by more than 30 years in the past century. Finally, a new immigrant legally arrives in our nation every 30 seconds. At this pace, we are adding new Americans at a rate equal to a new city of Chicago every year. Some time before the midpoint of this century there will be 400 million Americans.

We should be proud of this accomplishment. Today Americans are healthier and more prosperous than any other people on earth or at any time in our nation’s history. Our air is cleaner and our water is purer than at any time since records have been kept. Every natural resource and product of the earth whether water, food, minerals and even energy is more abundant, more available and more affordable today, relative to total personal income, than when our national population was 100 million or even 60 million.

Rural communities will soon feel the impacts of this population growth. Some of our farming communities have experienced population decline in recent years, mostly because of the migration of our children and grandchildren seeking better employment. However those population trends are starting to reverse. The baby boomers are now reaching retirement age. They are increasingly attracted to rural and farming lifestyles. Over the next 40 years, no community in the United States, large or small, will be exempt from the effects of population growth and, more importantly, no rural community will be pre-destined to miss out on the prosperity that two new generations of rural and farm entrepreneurs can bring to our nation.

In agriculture, we face both difficult challenges and lucrative opportunities as our nation’s population grows over the next half century. Nationwide, farmers today are a highly diverse and constantly evolving group of nearly 2.2 million entrepreneurs who differ greatly in the size and location of their operations, the products they produce, the environmental challenges they face, the marketing decisions they make and the annual revenues they derive from their farming operations. Fewer than 15% of farms today are commercial scale, farming-only businesses. These farms produce 75% of all domestic agricultural production. The remaining 85% of all farmers in the United States rely on off farm income to remain active in the agriculture sector.

Moderate sized farms are the only segment of agricultural production in our nation that is actually increasing in numbers of participants and, therefore, increasing as a total percentage of the agriculture sector. As such, the rough stability in the total farm numbers in the U.S. over the past 15 years is due almost entirely to the entrepreneurial spirit of new moderate-sized farm operators. In addition, an increasing percentage of our nation’s agriculture production assets are moving away from traditional and measurable food, fiber and energy production and instead are being devoted to entertainment, personal recreation and service sector uses such as agri-tourism, sports hunting and fishing, show and exotic animal operations, and the fast growing horse ownership sector. The productive output of these “service ” applications for agriculture assets are not fully captured in national agricultural statistical measures. But they have an undeniable impact on the business plans and lifestyle choices of hundreds of thousands of family farmers and ranchers living in our rural communities.

Our agriculture sector has also been blessed with abundant resources for agricultural production, and we have nurtured and trained the most productive generation of professional agriculturalists of any nation on earth. The potential for increased demand for US agricultural production is nearly limitless. Therefore, the National Grange believes that the United States does not have too many farmers. Just the opposite is true. We currently have far too few agricultural entrepreneurs who are prepared to exploit the nearly limitless numbers of potentially successful farm business plans and rural lifestyle goals that the next two generations of farmers and ranchers will be able to deploy over the next several decades in order to earn above average, market driven, returns on their commercial investments of time, talent and capital.

Therefore, the 2007 Farm Bill should set a goal of increasing the human resources in our domestic agricultural sector by encouraging the greatest participation by entrepreneurial individuals and families within the agriculture sector, as well as the broadest practical distribution of agricultural production among those participants. All agricultural producers should receive some direct benefits of federal farm programs and/or international trade agreements. The 2007 Farm Bill should provide some degree of credit, risk management, income support, and environmental stewardship programs for family farmers and ranchers regardless of the crop or livestock they produce. Farm programs should encourage sound conservation techniques, preserve prime agricultural land in the face of strong development and preservationist pressures, assure compliance with our existing international trade agreements and facilitate the introduction of cost saving and environmentally beneficial new technologies for all segments of the agricultural sector. The era when the direct benefits of federal farm programs or international trade agreements accrued mostly to the producers of a limited number of specific agricultural commodities should come to an end.

The next Farm Bill should also recognize and promote adoption of innovative farming practices like part-time, new uses, low investment/expense, direct-to-consumer, Community Supported Agriculture, biotechnology, bio-energy and organic farming. A successful 2007 Farm Bill will provide additional resources to assist family farmers and ranchers in managing risks and disasters that are beyond their control. Beyond risk management, it must also incorporate strong legal protections for producers who rely on traditional commodity markets or contract production from the antitrust threats that arise anywhere along the production and distribution chain from farm to consumer. It must directly address the collapse of reliable and publicly accessible price discovery mechanisms in major and minor commodities. Finally, it must provide new tools to prevent coercion, combat market manipulations and breakdown the existing legal barriers to freedom of commerce, in both foreign and domestic markets, that keep farmers and ranchers from receiving appropriate compensation for the fair value of their input into the agricultural production process.

One such potential anti-competitive threat we face today is the proposed merger of Monsanto, the largest crop life science company and Delta & Pine Land, the dominant finished seed company in the cotton market. Delta & Pine accounts for 50% of the U.S. cotton seed market and as much as 78% of the market in the south central and southeast cotton producing region. More than 83% of all U.S. cotton includes genetically-modified traits. Monsanto currently controls more than 95% of the herbicide tolerance and insect resistance traits in the cotton seed market. As an independent company, Delta & Pine has worked with Monsanto, as they should, to bring valuable traits to the market to benefit cotton producers. But Delta & Pine also has on-going relationships to develop and deploy competing traits with other innovator life science companies such as Bayer, Dow, DuPont and Syngenta. These competitive relationships will be discontinued if the proposed merger takes place. Other major crops, such as corn and soybeans, will then face similar anti-competitive practices if competing innovator life science companies cannot diversify their trait development costs across the cotton seed market as well.

Convincing policy makers to implement pro-family farm and pro-rural entrepreneur policies that address the challenges of living and working on a family farm or ranch will not be easy. The proportion of our population that is directly involved, or has had direct experience, in agricultural production has fallen from nearly 50% a century ago to fewer than 2% today. This means we can no longer take for granted that the general population has any realistic appreciation of the work and commitment involved in producing the safest, least expensive and most abundant supply of agricultural products in the world. Today, the average American under the age of 50 is two generations removed from daily life on a family farm or ranch. If we do nothing, over the next forty years, that generational distance from direct experience with active farm life of any kind will increase, until farm life is only a faint cultural memory in our society. Ignorance and antipathy regarding current agricultural practices among the non-farm population, compounded by nostalgia and myth about our nation’s agricultural heritage are among the most dangerous threats to prosperity in our nation’s farming and rural communities in the form of ill-conceived and poorly crafted public policy decisions that may be implemented at any and at all levels of government.

These challenges do not rest entirely with the non-farm public. As agriculturalists, we must also guard against relying too much on science and factual complacency to prevail in policy debates and win the confidence of our neighbors, consumers or voters regarding agriculture production practices. Recent examples should challenge us to reevaluate what we believe to be “facts” about agricultural production and the public’s acceptance of those facts. These examples include federal legislation to prohibit horse slaughter that passed the House of Representatives in 2006 by a wide, bi-partisan margin; the result of the Arizona referendum last November to ban hog gestation crates; the decision by Smithfield Foods last week to phase out of hog gestation crates; the decisions by several farmer-owned dairy cooperatives to phase out rbST milk from their product line and finally the announcement this week that Congressional Appropriations committees have decided to categorize nearly $186 million in individual agriculture research appropriations that fund valuable scientific inquiries at our land grant colleges as special-interest “earmarks” that will no longer be eligible for non-competitive funding. Instead of engaging in a war of “facts”, we need to pursue a strategy of greater direct dialogue with the non-farm public, which includes honest factual presentations, but also consists of listening and actively anticipating the concerns of our customers before their concerns rise to the level of policy conflict.

Another important challenge that many farmers have today is their age. A majority of our primary farm operators are over 55 years old and 35% of our primary farm operators are over the age of 65. The 2007 Farm Bill must foster a favorable environment which allows our current generation of family farmers to retire with dignity, and assures that the productive resources that they have faithfully stewarded will be transferred to new family farmers and rural entrepreneurs who will produce our nation’s food, fiber, recreation and energy throughout the 21 st Century.

Policy decisions that can affect generational transfer decisions include broader availability of credit lending authority that includes “service” applications and other non-traditional business plans for agriculture assets and enterprises; the broader impacts of conservation programs, especially between land retirement programs, like CRP, which tend to favor the assets remaining in current generation vs. conservation production programs that favor owners who actively work productive land; and the uncertainty related to taxes on ownership transfer, especially capital gains and estate taxes that discourage the current generation of farmers from increasing the value of their operations to meet the needs of energy and world export markets.

Only knowledge and education, as well as a vigorous, public discussion can effectively counter these challenges to continued prosperity in our farming and rural communities and educate the non-farm public about the tremendous diversity, accomplishments and contributions of our agricultural sector. Therefore the National Grange is calling on Congress to devote unprecedented new public resources to research, academic studies, blue ribbon commissions, technical assistance grants, “Sense of the Congress” resolutions and similar endeavors to explore vital questions regarding the interaction between public policy and prosperity in our farming and rural communities in the 2007 Farm Bill. Additional concrete steps should also be taken in the 2007 Farm Bill to divest authority for agricultural and rural development policy decisions away from the federal government and down to the regional, state and local government level where local citizens, both farm and non-farm alike, feel a greater sense of efficacy and commitment to an open and fair decision making process that will be appropriately tailored to the needs of their communities.

The National Grange also supports reauthorization of Conservation Title of the 2007 Farm Bill. The conservation provisions of the 2002 Farm Bill clearly moved our industry toward improving the environment and diversifying the delivery of farm programs to a wider constituency. However, demand for financial and technical assistance through voluntary conservation incentive programs continues to exceed available funding. Increased conservation technical assistance will be vital in the next Farm Bill. Additionally, Farm Bill conservation programs should continue to be resource-driven with sufficient flexibility to identify local priorities and concerns.

The 2007 Farm Bill must encourage conservation tillage practices and sediment control. Cost share programs such as the Environmental Quality Incentives Program (EQIP) and the Conservation Security Program (CSP) should be continued to establish best management practices controlling erosion and runoff. To reach their full potential, these programs should minimize requirements for non-income producing practices that necessitate major expenditures.

The National Grange supports continuation of a Conservation Reserve Program (CRP) as part of the 2007 Farm Bill. We believe that CRP programs should be integrated with other environmental protection and farmland preservation programs. CRP acres should have a high environmental benefit to their cost by accepting only highly erodible land for 10 years at a rental rate that is in relationship to its productive value.

The 2007 Farm Bill should also provide additional resources for local, state, and federal governments to strengthen, expand, and enforce farmland protection programs to enable farm families to pass their land on to future generations. One threat to maintaining open space for commercial production is land fragmentation. When large landowners are forced to sell due to development pressures, estate management or declining financial opportunities, valuable ecosystem services are removed from the land and replaced by irreversible urban development.

Another direct threat to open space comes from inappropriate applications of eminent domain authority for private development. Urban planners look at maps of productive farmland as “undeveloped” land when locating new commercial development or infrastructure. Reform of the U.S. Supreme Court Kelo decision is critically needed to protect decisions made by current and previous farmers to donate development rights to private land trusts and other entities. Kelo allows local governments to reunite specific land parcels with their severed development rights with the stroke of a pen and often at a fraction of the cost of a full condemnation. At a minimum the provisions of H.R. 4128, Private Property Rights Protection Act of 2005which would deny states and local communities access to economic development funding if they use eminent domain authority for private economic development, should be incorporated into the Rural Development Title of the 2007 Farm Bill.

Our nation’s dependence on foreign energy presents a once in a generation opportunity for our family farmers and ranchers. National Grange supports programs to increase our domestic bio-fuel production such as President Bush’s call for replacing 20% of the nation’s gasoline supply with alternative fuels by 2017 and the more ambitious goal of the ‘25 by 25’ Coalition of replacing 25 percent of our nation’s total energy consumption with renewable energy by the year 2025. Additional funding should also be provided in this Farm Bill for deployment of distributed energy production technologies such as on-farm wind, low-head hydro, solar and waste-to-methane facilities that could promote community, or even farm specific, energy independence, as well.

Over the next four decades, successful farms will overwhelmingly be knowledge-based enterprises. Whether you have 2000 dairy cows or five acres of organic vegetables, whether you use quarter million dollar tractors to work three thousand acres of soybeans or use an ATV to manage your 14 acres of wine grapes, or whether you take in guests on your farm bed and breakfast or you adhere strictly to the latest bio-security entry protocols on your livestock operation, your knowledge, your skills, and your experiences regarding your individual farm operation as well as your entrepreneurial courage regarding your business and lifestyle plan for that farm will be the most important factors in determining if you survive and prosper.

At no point in time since the Founders of the National Grange met in Washington, DC 140 years ago to create a voluntary grassroots organization to educate farmers, as well as all Americans, about American agriculture, has the impending structural shift in the nature of U.S. agriculture been more apparent. Circumstances have brought us to a seminal point in time which calls out for creative leadership to help shepard our farming and rural communities through the rapidly changing demographic, social and economic forces sweeping our country. I am confident that by working together we can forthrightly address the major challenges facing today’s family farmers and ranchers and the rural communities that nurture them. We can do this through the adoption of innovative and progressive policies as part of the 2007 Farm Bill. As our nation moves forward to welcome our next 100 million Americans, the next four decades will provide us with greatest opportunities in our history for the sustainable creation of wealth and the equitable distribution of prosperity in our rural communities. I am also extremely confident that the best time in history to live and work on a farm or in a rural community is clearly ahead of us, and not to be found only in our past.

Thank you again for your time and allowing me the opportunity to voice the thoughts, concerns and opinions of over 200,000 National Grange members concerning the formation of the 2007 Farm Bill.