A yearly land diversion program to address emerging disease and pest situation such as wheat scab, potato blight and Karnal bunt. However, this should not be considered or used as a setaside program.

I would also caution that the wheat scab situation has been exacerbated by another part of the farm program the Conservation Compliance rules. In order to minimize erosion, farmers must utilize a no-till or low-till system that leaves a residual of crops on the ground. This allows the scab an over-winter feeding medium that has caused this disease to reach epidemic proportion.

The law of "unintended consequences" has come to bear in this situation. Conservation Compliance was enacted in 1985 and farmers had to implement a farm plan by 1990. Sometimes it takes a long time before the full impact of these changes come to light. As important as erosion reduction may be, it is time to consider offering a variance for a year or two which would help control this rapidly spreading disease.

Payment of crop insurance premiums for crop producers who receive indemnity payments because of disasters.

Reinstatement of some type of disaster feed assistance program to reimburse livestock producers for a portion of the feed or hay which must be purchased due to a weather-related disaster.

LOW PRICES:

Trade

We must pass fast track negotiating authority. Continuing to delay the implementation of fast track is reducing critical time needed to define and advance U.S. negotiating objectives for the next round of multilateral negotiations, and the opportunity to realize meaningful gains in increasing market access.

Congress and the President must replenish the International Monetary Fund (IMF). IMF support is critical in reinvigorating the sale of U.S. farm commodities into Asia.

The Administration must live up to its commitment to use the Export Enhancement Program to its maximum to secure foreign markets for U.S. farmers. The FAIR Act provided $1.5 billion ($50 million per month) available for the program, but the Administration has used little of those funds.

Trade sanctions must be lifted. We impose trade sanctions on nations who don't live up to our concept of where they should be, or not doing what we think they should be doing. Sanctions don't work. They only hurt us, as we surrender yet another market to competitors who are only too happy to sell in our absence. We cannot export our social reforms or impose labor or environmental standards.

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USDA and the U.S. Trade Representative must continue to work to eliminate tariff and non-tariff barriers with our Canadian and Mexican neighbors.

We must continue to pursue fair trading practices with the Europeans regarding genetically modified organisms (GMOs). Com shipments exceeding 2 million metric tons to Europe are still being blocked.

Tax Reform

The next tax bill should include elimination of estate taxes, FARRM accounts, full deductibility of health insurance premiums, capital gains tax reform, and income averaging for farmers and ranchers.

Risk Management

We need to look for new ideas in the area of risk management. Farm Bureau is strongly supporting the FARRM legislation which would encourage farmers and ranchers to save for a "rainy day" by allowing them to deposit up to 20 percent of pre-tax net farm income into an interest bearing account. Funds could be withdrawn and taxed over the subsequent five-year period.

The Commodity Futures Trading Commission needs to revise their interim rules to make sure that agricultural trade options are a more viable risk management tool for producers. The current proposal does not provide the incentive that private industry needs to develop new management tools for farmers.

A Strong U.S. Research Program

Congress authorized $600 million over the next five years for a new targeted competitive research grant program. Numerous studies have documented that publicly funded agricultural research has consistently earned an annual rate of return of at least 35 percent. Congress has the opportunity in this year's appropriations deliberations to fully fund this initiative. If we are to maintain or enhance our competitive advantage in world markets and respond to future consumer needs, the federal investment in agricultural research must be increased.

Regulatory Reform

Last, but certainly not least is the area of regulation. Many farmers have told me they believe their greatest obstacle to profitability is oppressive regulations which unilaterally raise production cost and/or reduce yields. We want to reduce undue and unnecessary duplication of laws and regulations. We want a review of all existing federal rules. We want Congress to lay down specific guidelines and restraints on the agencies that administer the laws and are given the power to adopt rules and regulations. In other words, we want the regulators regulated. Federal

regulations cost farmers and ranchers at least $20 billion of what should be net income. While we tie ourselves in knots trying to conform to federally mandated contortions, we lose productivity and opportunities. Instead of working on better ways to farm, we waste creative abilities an management time on useless paperwork.

First and foremost our are extreme concerns about the implementation of the Food Quality Protection Act (FQPA). The Environmental Protection Agency's approach to promulgation of rules based on the "risk cup" theory is of great concern. The whole idea of increasing the safety factors by ten-fold and more on a repeated basis is a guaranteed way to eliminate crucial pesticides necessary for crop production. Important, essentially irreplaceable pesticides derived from organophosphates and carbamates would be eliminated under the criteria offered by the EPA.

Secondly, we are concerned about the schedule for the phase-out of methyl bromide. Under the Montreal protocol, industrialized nations are required to phase out the use of methyl bromide by 2005, while developing nations will have until 2015 to discontinue use. However, the Clean Air Act requires U.S. companies to discontinue the manufacture of methyl bromide by 2000. Such action will place the U.S. producers at a severe competitive disadvantage for 10 to 15 years. With Mexico our primary competitor in the U.S. fresh fruit and vegetable markets, this schedule is simply unacceptable.

The implementation of regulations regarding the total maximum daily loads (TMDLs) and the unrelenting drive to reclassify non-point sources of run-off from agricultural land as point-sources under the Clean Water Act is also a concern. This effort is manifested in EPA's effort to promulgate regulations for animal feeding operations/concentrated animal feeding operations (AFOS/CAFOS) as well as discussions to limit nitrogen application rates based on the hypoxia situation in the Gulf of Mexico.

The administration seems intent on pursuing the Kyoto Protocol and forcing farmers and other businesses to suffer the onerous impact of higher energy costs. EPA has readily admitted execution of the protocol would raise energy prices as much as 25 percent and private estimates suggest it could be double that amount. The net consequences to agriculture are appalling. Our economists indicate that such action could decease farm income from 25 to 50 percent.

Now, let's stop and think about that for a moment. We are talking about a potential 10 percent reduction in farm income as a result of the current commodity prices. Joining the Kyoto Protocol could have an impact on net farm income 2-1/2 to 5 times greater than that. Yet, some of the same people who are so worried about the current situation are indeed advocating actions that will be far more devastating to the farm economy.

It is time for Congress and the USDA to speak -- and speak loudly -- for regulatory reform. Overregulation has the potential to place the agricultural sector in much greater jeopardy than any bout of low prices or weather disasters.

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In summary, I would reiterate that an increase in loan rates and extension of loan maturities do not deal with the important issues that affect market prices and farm income. We strongly urge Congress to "stay the course” on the marketing aspects of the FAIR Act and to address our concerns about trade issues affecting market development, regulatory reform, additional and improved risk management tools, and tax issues. When producers agreed to support the FAIR Act in 1996, Congress assured us that this "unfinished agenda" is where efforts would be focused next. We ask you to keep that promise.