The Hagstrom Report

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The Lucas interview: An edited transcript

The following interview with House Agriculture Committee Chairman Frank Lucas, R-Okla., focuses on the commodity title of the next farm bill.

The interview was conducted on May 8, and a story about the interview appeared in the May 9 edition of The Hagstrom Report.

House Agriculture Committee Chairman Frank D. Lucas, R-Okla.

Rep. Frank D. Lucas, R-Okla.

HAGSTROM: What is your overall reaction to the Senate bill?

LUCAS: I appreciate Chairwoman Stabenow's herculean effort in getting a bill through markup in the United States Senate and headed across. I give her [Sen. Debbie Stabenow, D-Mich.] great respect for that. I know there's a lot of debate in this town about whether she'll be able to secure floor time. Do not underestimate Senator Stabenow's ability to persuade people to do things. If it is at all possible to get floor time in the United States Senate, I think she will.

I do have some concerns with the Senate bill, and I have been up front with those through the whole entire process. I have said all along that whatever the next farm bill looks like, it has to be something that all commodity groups and all regions will participate in. I'm not so sure in the way the present draft of the Senate bill is structured that there is an incentive for all, or a reason for all commodity groups to participate.

A safety net is a big issue with me. You don't just write a farm bill for the good times. And right now, setting our friends in dairy aside, we have had a five, almost a ten-year period of good times. You write a farm bill for the bad times.

I represent a part of the world that went through the economic horrors of the Great Depression in the worst possible way. I came home from college to watch the meltdown of the 1980s and '90s. I was a teenager farming for, and with, my father and grandfather when I watched the '70s.

The bottom line is this: Just because they have good times right now doesn't mean we will always have good times. I believe production ag needs a safety net that is a real safety net.

Shallow loss revenue coverage is great when you are in a period of high price. It is a great tool until you fall through. Once you get past that 6 or 8 percent protection -- and we have been crunching the numbers -- then it's a free fall to the bottom. A multi-year set of price issues historically is possible. I know they say we are in the new paradigm, that world demand, renewable fuel, and all these other things will always drive the demand for products, but I believe the folks who were selling houses back in 2008 said the price of home real estate would never go down, either. It happens.

HAGSTROM: Do you think that even corn and soybeans, which seem to like the shallow loss proposal so much, need to start safety net?

LUCAS: Everybody needs a safety net. If you follow the philosophy that producers should have a choice -- I've never said take the revenue option away from anybody, I've just said provide another option for everyone else.

If you've got options, we'll see what producers say. I think not only would my Oklahoma wheat farmers like having an option in addition to crop revenue or revenue crop -- however you want to describe it -- but I also think we might find a surprising number of corn farmers who will say, based on their experience, maybe we need a real safety net, and they would take the option. I'm just about giving people an option, not forcing the whole country to fit into one glove or one shoe, because we're not the same size everywhere.

HAGSTROM: You are going to write your own bill, correct?

LUCAS: I have promised my members of the House Agriculture Committee, after the hurry-up, bipartisan, bicameral process that Ranking Member [Collin] Peterson (D-Minn.), Chairman Stabenow, Ranking Member [Pat] Roberts (R-Kan.) and I went through in October, November, December, that if that did not succeed -- and, unfortunately, we did our work in the Ag Committees in House and Senate, the supercommittee process failed -- we would start over from scratch. That is why we have had all these hearings, and we finish up our subcommittee hearings next week. We are going to have a product that will be a product of the United States House.

There will be principles from the agreement, points, I should say, from the hurry-up farm bill back last fall because there are only so many ways to reinvent the wheel. But it's going to be a House product reflecting the membership of the committee and, of course, ultimately the floor of the House. Conference is going to be lots of fun.

HAGSTROM: Since you are talking about options, will you include the shallow loss program in your bill?

LUCAS: At this point in time, from my perspective, yes. I am not about taking anything away from anyone. I just want to provide options, so that everyone can participate in the way they think that is in their best interest, economic interest.

HAGSTROM: The argument [of northern crop lobbyists and Senate staff] is that if you put in target prices, they will skew what people plant. What is your reaction to that?

LUCAS: This is something I have heard of late on all manner of major and minor crops. I'd say in so much of the area, show me your data, show me where you can demonstrate based on past experience or analysis that this would make a difference.

I have noticed since the minimum fuel standard went in place that we have gone from 80 million acres of corn to 90 million acres. We might even plant 95 million acres of corn this time. I'd say that reflects a shift that didn't have anything to do with market prices.

And if you provide a revenue assurance program, which as long as we stay in the general price levels we are now, where you lock in a profit -- because you run the numbers, you run the numbers on all commodity groups, all regions -- that's better than Christmas.

HAGSTROM: What do your farmers grow in Oklahoma?

LUCAS: I have irrigated corn in the panhandle, dry land, and some irrigated cotton in the Southwest. Wheat almost everywhere in the west, two-thirds of the state, and there's some beans in there. There's some dry land corn in eastern Oklahoma in the low-lying areas, but not really a lot of barley -- and grain sorghum out in the panhandle. It’s a much more drought-tolerant plant.

HAGSTROM: A wheat farmer from Montana told me that if the higher target prices were to go through like they were proposed last fall, farmers in Montana won’t grow barley any longer. I talked to Ranking Member Peterson about this, and he said the solution is to raise the barley target price.

LUCAS: We have invited all groups to discuss with us what they think the appropriate target price is, and we are looking at all those numbers. I would also say the greater threat to agriculture in places like Oklahoma and Montana [is that] if you're a wheat farmer, I just don't see how the revenue program works for you. It just won't work, I don't believe, in its present form. That's why that option issue is so important.

HAGSTROM: You have gotten associated with defending rice and peanuts like all the other southerners. I understand Oklahoma does not grow rice. Could you just talk a little bit more about Oklahoma and what it does and its needs? Oklahoma is very different from the Southeast.

LUCAS: Look at it in the big picture sense. Farming is an equation of your soil, your weather patterns, and to a degree where your markets are. If you are a farmer where my grandfather, Fred Lucas, was born in 1899 in Indiana, you have got soil, and you've got generally favorable moisture. Your question there is not so much whether you produce a crop, it's what will the crop sell for.

If you farm wheat where I was born and live in western Oklahoma, your first question is based on the dramatically different soil top -- generally less-- based on the dramatically different weather patterns, which means less rain. Your question is: How many years out of 10 will you raise a crop? That's the first question before you get around to the concern about price: How many good wheat crops will I have in a decade? So it brings a different perspective.

That's why crop insurance and having options on the price issue, the revenue and traditional crop insurance, are perhaps in many ways more important in my area. I know crop insurance costs more in my area, a reflection of that weather pattern, too. If I were a corn farmer on a farm [in Indiana where] my grandfather was born, I pray for it to be dry so I can plant, I pray for it to be dry so I can harvest. Rarely do you see a western Oklahoma farmer praying for dry weather -- it's always rain. Where 45-plus percent of the overall crop is going to a government program, my question becomes: How do I maintain that price level? I'm not so concerned about making the crop or selling the crop. How do I maintain that price level? And that comes out to be a relatively narrow band in the way shallow loss works.

But in Oklahoma, the first question is: Am I going to have anything to sell? I don't have a guaranteed government demand for my product. And that applies to a number of other crops. So those are the issues that have bounced up.

Some have tried, yes, to paint me with a particular brush. The fact of the matter is I chair the House Agriculture Committee. I am responsible to production agriculture nationwide, whether it's Montana, Wyoming, Oklahoma, Texas, where my grandfather was born in Indiana or my great-great-grandfather on the other side of the house who was born in Georgia. I have a responsibility to the whole country.

I go back one more time to the point I made several times. I'm not trying to take anything away from anybody, but I've got to make sure that everybody has an option to be able to participate, to have a chance to prosper. I'm not going to pick between my children. I'm going to try to take care of all my children, so to speak, in an economic perspective.

HAGSTROM: The word is kind of out that your staff has done an analysis of how much each state would lose in the Senate bill, and that some states lose a much higher percentage than others. I've only been given by various people a few numbers. Are you willing to discuss this analysis in more detail or maybe give me the chart?

LUCAS: Let's say that we had used the best available numbers to crunch every particular, every possible option we can imagine, every possible state. That's part of our responsibility. At the present moment, I'll just word it this way -- if you are in a state that cannot shift into corn and beans, the way the language appears to be evolving on the other side of the building, you're in a world of hurt. That’s not begrudging some folks. It's just saying to everybody else, if you don't have that magic combination, you hurt. I suspect as we get closer to the draft of the bill and our numbers are more perfect, [there will be] access. I just can't quite do that today.

HAGSTROM: Sorghum hasn't been talked about very much. How do you think sorghum fares with the Senate bill? How do you want to handle it on the House side?

LUCAS: Sorghum is one of those crops that needs an option, too. As I'm seeing the data, they just have to have an option, too, if they are going to survive.

In the long run, sorghum has a great deal of potential with private industry and universities putting in more research. Its drought tolerance is amazing. It can be a part of the ethanol equation down the road somewhere. If we had spent the money on research on it [that] we spent on other crops, it would be a factor now.

HAGSTROM: The National Association of Wheat Growers is supporting the Senate bill, but the Oklahoma wheat growers have said they need target price protection, and I have heard that some wheat growers in Montana, North Dakota and other states also see the need for it. Is this going to have to be a regional battle?

LUCAS: My Oklahoma wheat producers have been very straightforward about the need for an option. "Unequivocal," I believe would be the phrase, and the data reflects that.

Wheat is like many other crops. If we are successful increasing an option in a year or two, I will look and see. I will be happy to sit down with anybody and look to see who picked which option and in what numbers.

But I also respect and appreciate the leadership of any group that has a diverse number of states and a diverse number of perspectives to address.

HAGSTROM: To talk a little bit more broadly, how big a budget cut do you think you are going to have to do on the House side? Do you think it will be $23 billion over 10 years, $30 billion, $33 billion?

LUCAS: Part of why I pushed so hard with my friends, the principals of the Ag committees, House and Senate, in December was to try to achieve a $23-billion cut. I think that's the best we could hope for, and I understand why the Senate picked that approximate number to work off of. But with the President's call for $33 billion, with the intensity of the budget hawks I have in the United States House, while I'm not sure yet of what the final number will be in drafting, it is probably going to be closer to what President Obama wanted than what the principals agreed to last fall.

Not only do I have a committee process to go through, but Speaker [John] Boehner [R-Ohio] made it clear from day one -- not an open rule but an open process on the floor. I have an extra challenge that lies ahead of me when we get to the floor that will make this even more exciting.

HAGSTROM: When you say “not an open rule,” it could possibly be a modified rule?

LUCAS: I personally think that's what that means. I have to have a bill out of committee before I sit down and discuss those kinds of issues with leadership. What sort of a rule it is considered under is a long ways down the road. We’ve begun the appropriations process. So it might well be that even though we will have completed a bill, hopefully in the House Ag Committee, it might not have an opportunity to come to the floor until after the Senate has done something on the floor.

HAGSTROM: Outside of the commodity title in terms of the Senate bill, are there any particular problems you see or particular things you like?

LUCAS: The language seems to be very similar to what was agreed to in October, November, December. For instance the CRP, I remember the authorized number coming from 32 down to 25. I won't be surprised if that's not very close to the number in the House. The one big difference I see is probably on the nutrition side where to pass out of the United States House, we will have to have a higher level of reforms to achieve greater savings than the Senate did. But that's not surprised anyone. Ultimately, that's the kind of number that's sorted out in a House-Senate conference committee, but the whole bill will leave the House with a great set of savings than the Senate will be able to achieve. I'm not critical of the Senate. That's just the world I'm operating in over here.

HAGSTROM: We haven't mentioned Senator Roberts.

LUCAS: Mentor. My friend.

HAGSTROM: He seems so opposed to higher target prices. Since your states are so close, why do you think he has such a different view on this?

LUCAS: Remember Pat, as a member of Congress and as a staffer before that, was a product of the struggles of the '70s and '80s where we had some real problems in trying to handle policy. I can appreciate why he still has strong feelings. But I think it's also fair to note that, while Kansas has historically been a rather substantial wheat producer -- even as the senator has noted in public -- coming from the east working across the west, corn and beans are becoming more and more of a major economic force in his state. He's got the soil and the climate, apparently frequent-enough moisture to do it. It would be nice if I'm representing a state that had that much flexibility, but once again, my focus is options for everybody. I'm still very fond of my first Republican Ag Committee chairman.

HAGSTROM: Do you think the cotton provisions in the Senate bill are satisfactory?

LUCAS: The way that I understand the language now, I believe you will see a slightly different version in the House bill.

I can't give you the specifics at this moment off the cuff, but there are differences in the way they handled it over how we addressed it last fall.

HAGSTROM: What do you think you will have to do for rice and peanuts?

LUCAS: Working on that.

HAGSTROM: I have had a discussion with Mr. Peterson about the Conservation Reserve Program. He is worried that too much land is going to come out. Do you share that concern?

LUCAS: If you look at the way the Senate crafted their language, they actually slowed down the rate at which it comes out. Those may be some of the issues that we have to discuss, but if we don't make adjustments to capture the obvious savings that are occurring, then we’ll just lose it. And we really need every penny to do all of these other things that we can scrape up.

HAGSTROM: When people were first talking about these reforms and getting rid of these direct payments, you raised the issue that there are people in Oklahoma who will have taken land that was in crops and now have some grass, and that people needed to think about what were the impacts of cutting direct payments are going to be. I understand that there is a cap in the Senate version, so that people would not be able to take grassland and put it back into crops.

LUCAS: : Some kind of sod-buster provision. I'm sure all those are topics that will come up in front of the House Ag Committee, but I'm not inclined to put those restrictions on. I'm not inclined to restrict the number of dollars of crop insurance. Resources should follow production, but that's the kind of issue that not only will you see discussed and, in the committee, I promise you there will be amendments on the floor on all of those points.

In fact, it will be interesting to see how leadership reacts if we have a fairly open rule and two or three hundred amendments follow.

HAGSTROM: What about the payment limit provisions in the Senate bill? What did you think of those?

LUCAS: I still prefer what we agreed to back in October, November, December, but there again, as I mentioned to you earlier, open discussion, we are going to have a lovely family conversation in the House Ag Committee on this.

HAGSTROM: Ranking Member Peterson is very optimistic about this bill moving forward and getting passed. Do you share that optimism?

LUCAS: You can say Lucas looked me in the eye and said, as an Oklahoma wheat farmer, “I always expect to make a crop when I put the seed in the ground.” I'm optimistic we'll get our work done. There are a lot of hurdles and a lot of burdens and a lot of challenges, but we can get this done. And Mr. Peterson and I will do everything we can in a bipartisan way to bring our entire Ag Committee along with us as we work our way across the floor and through the conference.

The Ag Committee still works differently than most other committees.

HAGSTROM: Any expectations on when the bill might go to President Obama?

LUCAS: Before Election Day would be a wonderful thing, but who knows?