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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

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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

insurance has failed to meet the needs of production agriculture under stress and the program is in desperate need of improvement. Primarily, the present system fails to adequately provide coverage levels for price and yield.

Until Congress seriously takes on this issue of risk protection for agriculture by reforming crop insurance, uncapping the marketing loan, fully funding agriculture research programs and expanding export markets, we should bridge the current income gap for farmers by immediately passing emergency disaster assistance as the Senate did in the fiscal year 1999 agriculture appropriations bill. During the interim period as Congress and the Department of Agriculture work to augment current risk management opportunities to more adequately meet farmers' needs to protect against farm income losses, Congress should take quick emergency action to pass supplemental crop insurance, a compensation program for farmers and ranchers whose productive land continues to be under water, and extended authority for the livestock disaster program.

U.S. House of Representatives

Committee on Agriculture
Hearing the State of the Farm Economy

Thursday, July 30, 1998

Statement of the Honorable Leonard L. Boswell

Agriculture is paramount to the state of Iowa. The state's farmers frequently rank first in the production of hogs, com, and soybeans. The industries and small businesses that provide the goods and services to these farms and that process the raw goods are the backbone to lowa's rural communities.

Every weekend I travel around the district, and I am beginning to hear increased concern from our farmers. Hog prices have been low since around the first of the year. And given the numbers, it seems as if those prices will not rise for some time into the future. Com and soybean farmers are facing prices well below normal, and given increased world stocks, those prices may remain low well into the future. This means that farm income will decrease. This is a problem that needs examining.

This is why I welcome this opportunity for the full Agriculture Committee to examine the state of the economy in our nation's agriculture communities. Now is the time for our nation's policy makers to explore the current situation and concerns of our farmers.

One tool to address these concerns is within our reach. Passing legislation that would fully fund the International Monetary Fund (IMF) would serve as the most immediate assistance to what ails many of this nation's farmers: low prices. To raise prices we must increase world demand. To strengthen world demand we must stabilize countries that serve as important buyers on the world market. The most glaring example is the financial crisis now plaguing many countries in Asia. Other than Canada and Mexico, the Asian market represents the most important market to United States agriculture, accounting for about forty percent of U.S. agricultural exports worldwide. In fact this region represents 45 percent of export growth in the period of 1991-1997.

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The IMF serves to stabilize these economies and to encourage countries to make more fiscally sound policy decisions so that they can sustain growth. Such a policy serves only to further one of the broad objectives on which all members of the agricultural community agree: increased trade. With viable and growing economies comes increased demand for U.S. agricultural products. Our nation's farmers need this increased demand to shore up weak prices.

There are many things that we could and should do to strengthen our agricultural economy. The most immediate of these solutions is IMF. Congress should act, and act now, to pass legislation that fully funds the U.S. portion of IMF.

Other important initiatives this Congress should work toward include funding new agricultural research and rural development initiatives to help rural communities help themselves. Further, Congress must examine revamping crop insurance to make it a viable risk management tool for our nation's farmers.

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