Statement of Representative Helen Chenoweth Regarding Review of the State of the Farm Economy July 30, 1998 Mr. Chairman, thank you for holding this hearing to review the state of the farm economy. Since passage of the Freedom to Farm bill (now Public Law: 104-127) there have been opportunities and challenges for agriculture. Today, farmers and ranchers in Idaho are experiencing economic hardships due to low prices in agricultural products. In July 1998, the bid for soft white wheat in Idaho has been below $2.00 per bushel. This price is unfortunate when the cost of production for soft white wheat exceeds $3.00 per bushel. But, Mr. Chairman, it is far from clear that these prices are due to Freedom to Farm. There are many factors which must be weighed, including how our American Farmers are treated in the international market place. I appreciate the Chairman for looking at these issues. Take the Pakistan issue, for instance. Congress' quick action to restore GSM credits to Pakistan was vital to restoring the wheat market. I worked tirelessly to defeat these sanctions and it's good to see our farmers won't be subjected to the devastating losses that would have resulted if they were left in place. Additionally, H.R. 4265, the Emergency Farm Financial Relief Act, is responsible legislation which would help address the financial distress in the farm country. Mr. Chairman, I appreciate your leadership on this issue. Unfortunately, more action must be taken to stabilize the agriculture economy. Mr. Chairman, we need to reinforce the trend toward greater integration of U.S. markets into foreign markets. Free and fair trade must be guaranteed. We must embrace fair trade agreements which promote incentives for U.S. resources, labor and capital. I believe before launching yet another round of trade deliberations, we must get our priorities straight and evaluate the North American Free Trade Agreement (NAFTA) before its expansion. Additionally, we must continue to compensate U.S. exporters for markets lost to unfair foreign competition. As such, full funding of agricultural export programs like the Export Enhancement Program, GSM 102 and 103 Credit Programs, the U.S. Department of Agriculture Cooperator Program and the Market Access Program is important. Although President Clinton refuses to properly use his authority to help our farmers, Congress must stand firm and continue to urge the Administration to help 2 farmers cope with the cash shortage they are now experiencing due low prices. Mr. Chairman, during this Congress I introduced H.R. 1371, the Country of Origin Meat Labeling Act of 1998. H.R. 1371 is good trade policy. For many industries, labeling the origin of product is commonplace, and given the increasingly strong foreign competition in the meat industry, labeling is necessary to better inform American consumers. Homemakers I have talked to in Idaho, and national consumer organizations tell me that Congress needs to pass legislation to institute mandatory meat labeling for country of origin. They say that with America's high food safety record consumers would choose to buy American. American farmers and ranchers should be recognized for their commitment to providing the safest most wholesome and affordable food, fiber, and other renewable resources in the world. We need to continue to secure financial stability for farmers, ranchers and the local community. I look forward today to hearing from our panels of witnesses to better understand how to improve our farm economy. Thank you Mr. Chairman. Statement of the Honorable Earl Pomeroy Member of Congress - North Dakota Before the House Committee on Agriculture July 30, 1998 Mr. Chairman, thank you for holding this hearing and hosting the Secretary of Agriculture and other distinguished witnesses. This hearing, to review the state of the agriculture economy, comes at a crucial time. Agriculture is the top ranking industry in North Dakota, directly and indirectly generating around 65 percent of the state's gross income. Direct and indirect agriculture employment accounts for about one out of every four jobs in the state. North Dakota's economy depends more on agriculture than all but three states. So it isn't hard to understand that if agriculture is suffering North Dakota's economy must be suffering. Agriculture is suffering in North Dakota. Farm income declined by 98 percent from 1996 to 1997, and the Commerce Department reports North Dakota farm income for the first quarter of 1998 is negative $288 million. Farm debt has increased to levels 'not witnessed since the 1980's and net returns for wheat are at their lowest levels since the 1970s. Even older generation farmers cannot remember when wheat, durum and barley prices were lower. Scab disease has caused income losses in the billions, and 2,000 of only 30,000 North Dakota farms will fold this year. North Dakota's agriculture economy is in a state of crisis, as prices are not keeping up with production costs, and weather and crop disease are lowering yield and quality: One-third of North Dakota's 53 counties have been declared a federal disaster in each of the last 5 years; one-half of North Dakota's counties have been declared a disaster 4 of the last 5 years; and two-thirds have been declared a disaster in 3 of the last 5 years. According to North Dakota State University (NDSU), weather and disease-related losses in North Dakota for 1997 were $293.2 million, with $103.9 million in losses due to price changes. NDSU estimates total impacts of these income losses on the North Dakota economy was $1.223 billion. These circumstances, completely out of producers' control, have obviously affected individual income levels: NDSU estimates wheat producers lost between $26 and $40 per acre and the average North Dakota producer lost $23,000 in 1997. NDSU estimates that in 1997, poor weather conditions, late planting, and crop disease caused yields for spring wheat to decline about 22 percent from the normal trend, 26 percent for durum wheat, and 18 percent for barley. Direct production costs in 1997 were down marginally compared to 1996, but were still about 65 percent higher than in 1991 according to NDSU. Average production costs per acre for cash rented land outside the Red River Valley in North Dakota for 1997 were $117 for spring wheat, $115 for durum, and $110 for barley. In light of the costs of production, crop insurance coverage assuming 65 percent multi-peril coverage will only indemnify $71 per acre for wheat averaging 30 bushel yield, and $94 per acre for wheat averaging 40 bushel yield; producers are exposed to risk far in excess of their available coverage. The reason present federal farm policy is being called into question is because agriculture producers do not have access to adequate risk protection. The Upper Great Plains have experienced several years of unusually wet conditions which have drowned out significant acreage and created an epidemic of scab infestation causing $3 billion in losses over the last five years. As a result, our region is a first test case in agriculture without the safety net features previously provided by agriculture disaster programs, marketing loans and deficiency payments. Crop |