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was promised in the legislation may not be adequate. Worldwide production today is large. Increased stocks have depressed prices. Livestock prices remain depressed. Our milk prices are increasingly volatile; producers in Texas and many other States have suffered both crop and forage losses now over a multiple number of years. The Asian financial crisis, many of our farmers do not fully appreciate how significant that region of the country is to our own market opportunities; some 40 percent of our agricultural exports have to go to that area.

To protect from crop loss, producers have purchased crop insurance, but we are now finding that the coverage is inadequate, too expensive, and does not address multiple year losses in regions of the country that have multiple year losses.

The 1996 act removed much of Government's authority to address many of these problems. In some cases this was wise, such as eliminating curbs on producers' choice on which crops to produce. And in some cases it was folly; authority for a paid diversion, for example, should have been retained in order to give us the tools necessary to address problems in regions of our country that have had persistent disease problems.

Some now say that the administration and Congress have not lived up to their roles, and I think when you look at Congress's role, we have not fulfilled the promise made in 1996.

The lack of fast track authority, negotiating authority to continue to address the unfair trade practices and to open up new markets, we have not given that tool to the administration.

Zeroing out new research dollars after this committee worked awful hard, Mr. Chairman, to pass a research bill to find, unfortunately, the dollars were not forthcoming from the appropriators.

Ensuring an adequate crop insurance program, we have not lived up to that expectation or promise.

And as you mentioned, the IMF funding to address the Asian financial crisis, we have not done; but I hope that we do it before we adjourn next week.

The Commission on the 21st Century of Agriculture was required to release its interim report by June 1, 1998, and it has not done so as yet.

Mr. Chairman, there are a lot of questions and we will listen to the expert testimony today. I am pleased to have Secretary Glickman with us today, and I intend to ask all of the witnesses the following questions: Is the safety net adequate? Will producers who have suffered severe crop losses be protected in such a way that they can continue to operate economically? Can any of these problems be addressed administratively? What must or should Congress do? What problems lie beyond the scope of Government policy?

These are questions that I am sure many of our colleagues will have, and I look forward to hearing from the witnesses and seeing if there might be an answer or two out there, Mr. Chairman.

The CHAIRMAN. I thank the gentleman for an excellent statement. All members' opening statements will be made a part of the record so we can expedite the hearing and get as soon as possible to the Secretary and to the other witnesses.

[The prepared statements of Members follow:]

STATEMENT OF HON. JOHN THUNE Mr. Chairman, thank you for calling this hearing. I, and the producers I represent, appreciate the bipartisan manner in which you and Mr. Stenholm have operated this committee over the last year and a half.

Producers from around the Nation are making their voices heard. There are real problems in rural America. At the close of the markets yesterday, spring wheat was as low as $2.78 per bushel, winter wheat was as low as $2.09 per bushel, corn was as low as $1.58 per bushel, and soybeans were as low as $4.93 per bushel. I understand producers' concerns. It is simply impossible to break even at these prices, let alone realize a profit. Market, weather, and financial conditions are such that the future of agriculture in my State of South Dakota and many other parts of the country is rather bleak. The variety of problems being faced by American agriculture cannot be solved by endless political banter. Only by coming together in a focused and non-partisan manner can we begin to address the problems by identifying and implementing timely solutions.

Regarding solutions, much of what has been discussed is somewhat long-term in nature. Approving fast track negotiating authority, replenishing and reforming the International Monetary Fund, reforming United States policy on sanctions, using the Export Enhancement Program and GSM credit guarantees, and actively seeking the elimination of barriers to trade with other countries will serve agriculture well and put the industry on a sound footing.

Producers in my State of South Dakota understand the need for a longer-term focus on trade and generally support current efforts to develop foreign markets. Additionally, they appreciate the production flexibility provided by the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act) and understand the need to reform United States agricultural policy. However, they also point out that inasmuch as these initiatives have a longer-term focus, they do little or nothing for them today. Many fear that without some form of assistance today, they will not be in a position to benefit from tomorrow's reforms. They fear personal and financial ruin.

Among the obstacles to providing immediate relief to producers are the impact on the Federal budget and honoring the seven-year program put in place by the FAIR Act. Congress has rightfully directed American agriculture toward a flexible, market-oriented economy and away from a market-distorting economy defined by Federal price supports, direct subsidies, and ad hoc disaster assistance. However, given the importance of a quality and consistent supply of food to the viability of our nation, immediate, calculated, and decisive action on the part of Congress is warranted.

I would like to highlight a pumber of simple initiatives that, if enacted, would deliver immediate relief to producers. Each of these initiatives, I believe, can be sup, ported on a bi-partisan basis, can be implemented within weeks, and will bring real and timely support to American producers,

Country-of-Origin Labeling of Meat and Meat Products. Labeling should give do mestically produced beef an edge in the domestic market and may also give American beef an edge in less nationalistic foreign markets seeking a quality product.

Interstate Shipment of State Inspected Meat and Poultry. This will allow local packers access to new markets and provide a new level of competition to the big packers.

The Emergency Farm Financial Relief Act. The Emergency Farm Financial Relief Act allows producers to take their 1999 AMTA payment as early as October 1, 1998. Essentially, this allows a producer to receive the 1998 and 1999 payments within one day of each other.

The Emergency Farm Financial Relief Act will provide producers enhanced flexdbility and increased cash flow regardless of whether they have been able to plant a crop. The Emergency Farm Financial Relief Act will allow producers to make better decisions regarding the future of their operations. It is my hope that the infusion of capital will allow producers to ride out the current situation and that our efforts to increase the demand for American agricultural products through market development will then carry American agriculture into an era of stable prices and less volatile markets.

The Farm Life Extension Act (FLEX Act). The FLEX Act, which I introduced together with Mr. Moran of Kansas and Mr. Lucas of Oklahoma, is similar to the Emergency Farm Financial

Relief Act in that it also accelerates the transition payments provided for in the FAIR Act. Unlike the Emergency Farm Financial Relief Act, the FLEX Act gives producers the option of taking the present value of all future transition payments in one lump sum, providing current flexibility and cash flow. I have heard from a number of producers regarding the current situation in agriculture and the impact of Freedom to Farm. Some believe Freedom to Farm is working as it was intended and others believe it is flawed.

The FLEX Act would allow producers total control over the future of their operation—the FLEX payment is entirely optional-producers would need to decide whether to take the single payment or continue to receive annual payments. The FLEX Act would allow producers to pay down a considerable amount of debt, expand their base of operations, or retire from farming all together.

While producers appreciate the production flexibility of Freedom to Farm, those who have found fault with Freedom to Farm have consistently pointed to the lack of cash flow as their primary concern. The FLEX Act solves producers* cash flow problem by putting a considerable amount of capital in the producers* pockets right now, when it is most needed, allowing them to make the necessary decisions about the future of their operation. The FLEX Act provides cash flow even if the producer was unable to plant a crop. Without a crop, a producer receives no benefit from an increase in the marketing loan rate.

In conclusion, I urge members of this committee to voice loudly the concerns of producers to those Members of Congress not yet convinced of the problems faced by American agriculture. I urge all members to support the trade related items outlined by Agriculture Committee leaders and House leadership at a news conference last month. I urge all members to support the initiatives I outlined earlier in my comments.

It is my hope that through the actions of Congress and through their own sense of perseverance, producers will be able to avoid a 1980's style crisis in agriculture. Agriculture is, and will be into the foreseeable future, South Dakota's number one industry. Small

, family-owned farms form the backbone of the agriculture industry in South Dakota, and I will work for their continued existence.

Congressman Bill Barrett

Hearing of the
Committee on Opening Statement of

Review of the state of the farm economy

July 30, 1998

Thank you, Mr. Chairman, for holding this very important hearing on the status of the farm economy.

Regretfully, there has been a down-turn in the farm economy. For my producers in Nebraska, 1998 has turned into an especially bad year. Not only are these hard working men and women faced with all the hardships Mother Nature can conjure up, but they must also deal with the failure of foreign economies. Compounding the problem is an Administration with no clear focus on export agricultural policy.

Over the last several months, I have continually stated my position on several of the key issues I believe have the greatest impact on the financial stability of our farmers and ranchers. Let me once again reiterate my position on what is becoming known as the four-point plan.

This four-point plan is being dubbed the “square deal” for farmers. This plan involves: (1) pushing for fast track; (2) a bipartisan agreement on the reform and funding of the International Monetary Fund; (3) renew normal trade relations status for China; and (4) removal of agricultural products from unilateral export sanctions.

I have supported the renewal of fast track authority since early last year. The Asian Crisis is of great concern to me because of the affect that it is having on farmers across the country. We must vote for the continued funding of IMF because we must keep those Asia markets open to our agricultural products. I call on the Senate to follow the lead of the House and renew normal trade relations with China. I appreciate the concerns of some of my constituents regarding China's human and religious rights' policies. However, we should not shut out over one billion people from our agricultural exports. Lastly, we have made some definite progress in the removal of agricultural products from unilateral sanctions, but there is still a considerable amount of work that has to be done. Because of the

Administration's failed foreign policy directives, Congress has used unilateral sanctions, including agricultural products, to enforce our will on other nations. We took such action because it was the easiest thing to do at the time. We are now beginning to realize the ramification of such an action. In the end, the only group “injured” in this type of action is the American farmer and rancher. The United States can no longer afford to use food as a weapon.

As chair of the Subcommittee on General Farm Commodities, I have held several hearings on expanding agricultural trade and insuring the financial stability of our farmers and ranchers. I am very concerned about the issues previously mentioned.

I would also like to reiterate my support for the 1996 Farm Bill. Farm bills do not set agricultural market prices. The reason for today's weak prices is the world oversupply of stocks and the Asian financial situation. The record-to-date shows that Freedom to Farm has done an excellent job supporting U.S. farmers. Markets continue to do what markets do, they go up and they go down. It was unrealistic to assume that the record-breaking commodity prices that were experienced the last three years would continue indefinitely. For the first two years under Freedom to Farm, there has been $11.5 billion in transition payments provided to farmers. Under the old farm bill there would have been only $4 billion in deficiency payments provided. In those first two years, the 1996 Farm Bill put an additional $7.5 billion into the pockets of our agriculture producers.

The talk of re-opening the Farm Bill is not wise. We made a deal with farmers and ranchers, and I plan to stick to that deal. What Congress needs to do is further expand trade. The consumers of over one-third of America's agriculture products live overseas. We need to focus on steps to reduce trade barriers, ensure overseas Asian economies become financially stable, and expand into previously hindered markets.

There is always frustration in farm country when prices hit low levels. That is understandable. It is important to keep current price levels in perspective now that they have come down to more normal levels; we must keep in mind that the markets will cycle back up. We must not blame the Freedom to Farm Act but work towards the issues that will make U.S. agriculture strong in the future. Congress has a real stake in world


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