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Allow a producer to customize an individual loan rate for his commodity and operation. This would allow a producer and the lending institutions to work together on an individual operation. The flexibility of this choice would allow a producer a chance to control the expense and maximize profits in the individual basis.
The Flexible Fallow Program is such a program providing these options. This would be a policy addition to the current farm bill now in place to allow a farmer a better way to minimize the risk on an individual basis.
An alternative to the above would be set a loan rate that is more effective. The current loan rate on all commodities, especially cotton, is much below break-even prices.
The uncertainty and inconsistency in farming in America with a reliable safety net has left my operation strained and stressed the last several years. Trying to keep debt at a minimum, farmers cannot continue at today's prices and keep their equity in the farming operation.
Competing in markets beyond the boundaries of the United States has great disadvantages. Unfair trading rules, export subsidies, comparability of labor, environmental issues, and currency valuations all impact trade policy. I believe that the American producers have to go by higher standards and stricter regulations than most producers in other countries. American producers should be compensated for their efforts.
The strength of the dollar greatly affects agricultural exports. Some device is needed to make the playing field level when the competition with other producers that are highly subsidized from their governments.
Investigate the possibilities of trading with other countries that we are not currently trading with and develop those markets. Those countries obtain product from other countries and we lose market share.
The non-acceptance of genetically modified crops originating around the globe, or more recently in the United States, has spread into the market equation. We need sound scientific research to convince the consumer that the products with the GMO's technology are a benefit and not a hindrance. Without the use of these technologies, operating costs will continue to increase even at a higher pace.
The merging of farm-related companies are a major concern. Without competition to keep production input costs down, the need for a viable risk management or safety net is increased.
The American farmer is not the sole beneficiary of American agriculture programs. Agricultural program payments also benefit consumers as well as local, State, county, and national economies. Many Americans who voice a negative opinion to farm programs and policy do not realize they benefit indirectly from these programs.
And, in conclusion, I would say a strong and ethical safety net for producers is needed, a farm policy that enables producers to receive a fair and equitable price for their commodities, fair competitive markets, and investment in our rural economy, protection of our natural resources for the future, fair and equitable implementation of government programs.
Thanks again to you, Chairman Combest, and the entire Committee on Agriculture for your time, diligence, and efforts to address these policy issues. I hope the information presented to you today will help you make policy that will help American agriculture and rural America prosper for the many years to come. Thus, the priority is to keep the United States of America the leader in agriculture.
Thank you, sir. [The prepared statement of Mr. Arthur appears at the conclusion of the hearing.)
The CHAIRMAN. Thank you, Mr. Arthur.
STATEMENT OF WILLIAM KUBECKA, RICE PRODUCER Mr. KUBECKA. Thank you, Mr. Chairman, and the other members of the committee. I appreciate the opportunity of being here today. I'm not going to be redundant in my—I'm certain you will hear this appreciation given by all.
I'm Bill Kubecka from Palacios. I'm a diversified producer growing rice, sorghum, and cotton. I also have a cow-calf operation. Today I not only represent myself, but I also represent the views of 47 individuals that met at a farm policy forum in Bay City, TX, on February 17 to prepare for this hearing.
The 47 individuals came from Brazoria, Calhoun, Jackson, Wharton, and Matagorda County. This gathering was put together by the chamber of commerce of those particular counties and by the county agents. As a group, we agreed to, and I bring to you, the following recommendations concerning farm policy.
Farm policy should provide food security for the United States through the production of abundant, affordable food and fiber and from a profitable agriculture economy. Everyone likes the flexibility of Freedom to Farm, but would prefer a stable market to prevent emergency payments.
I'm kind of going over these different items rather than just reading per se. These are all points that the group came up with.
The safety net provision of the farm bill needs adjustment. We oppose the mandatory set-aside, but could support a voluntarily reduction for higher loan rates on planted acres. Current loan rates are unrealistic to producer costs. LDP's should be based to keep U.S. crops competitive in the world market.
Yield data used in farm programs needs to be updated to reflect current yields. The group felt that the crop insurance can be a risk management tool, but there needs to be changes. The insurance should encourage prudent production and discourage non-production of crops and failed acres solely for the insurance purposes. And I can say we've had plenty of that down on the coast.
The program needs more oversight. We need to link the insurance to the individual rather than to the land. We've got people that are moving and just keep on collecting from the insurance. Insurance coverage should be related to the cost of production. Revenue insurance should be supported.
We believe that Government assistance should be production based and not limited by the person determination. Profitability has been maintained by the economy of scale. And when you have
the person determination, it's just not fitting the form that the farm that we're having to operate today.
Current payment limits do not correspond with efficient production unit size. To be more competitive in the global marketplace, we believe the following must happen: Embargoes and sanctions must be lifted. We must be proactive and aggressive in increasing and holding new markets. We must have help from our Government in research, development, education on traditional crop production and its alternative uses.
Again, these were just kind of labeled that the group came up with. I know we'll have a question-and-answer period, but hopefully some of this, at least you hear what this group of people thinks about the different issues for our present and any future farm legislation. Thank you, Mr. Chairman.
[The prepared statement of Mr. Kubecka appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you very much.
STATEMENT OF DONALD PATMAN, PRESIDENT, TEXAS FARM
BUREAU Mr. PATMAN. Mr. Chairman, and members of the committee, I am Donald Patman, farmer and rancher from Waxahachie in north central Texas, south of Dallas.
I serve as president of the Texas Farm Bureau. I grow cotton, wheat, corn, soybeans, and raise beef cattle. A copy of my statement has been submitted to the committee. I'd appreciate its inclusion in the record. For the hearing, I will summarize my remarks.
The Farm Bureau supports the overall concept of the 1996 Fair Act, but we also support a review of the act and some modification which we will discuss today. We especially support the flexibility that allows a farmer to respond to market conditions in terms of what to plant, and we recommend this continue to be a part of any farm program.
These payments have been critical to producers, especially during the past 2 years' low prices. We support the addition of a counter cyclical safety net in supplementing the AMTA payments. We recognize that these adjustments must be made when periods of low prices extend several years, as they have currently.
Improving trade is a high priority for Farm Bureau. Since we export about one-third of our product, that is why we have made several suggestions, including the lifting of trade sanctions on agriculture commodities and providing permanent normal trade relations with China. It is important the market promotion and Foreign Market Development Programs be continued.
We also make several suggestions for long-term comprehensive disaster programs to deal with drought and its conditions so producers will not be reliant on special Congressional action each time we have a disaster. Our suggestion is designed to provide assistance to producers of all commodities.
Crop insurance simply has not worked in Texas well in Texas. We support H.R. 2559, legislation passed by the House Agriculture Committee in the last session. I hope it is enacted soon.
From a personal standpoint, I have been participating in a pilot program for central Texas for the past 3 years. This program has worked well for me in that it is affordable and paid well in 1998 during a particularly bad year.
I will be happy to respond to specific questions about this pilot program, as I believe it comes close to what producers are looking for in an effective program.
Special emphasis should be given to a viable risk management program to cover all commodities including livestock. Most livestock producers normally fail to qualify for many of the programs currently available. We support funding for the livestock feed program. It would be beneficial if a revolving fund could be established so that annual designations in funding are not required, which could provide more timely assistance.
Finally, in regard to the current farm bill, we support the current loan rate structure. Unfortunately, when those loan rates were established, no one expected farm prices to fall below those rates. Nevertheless, the Farm Bureau remains concerned about the Gov. ernment accumulating large amounts of stocks or loan rates encouraging overproduction in contrast with the market signals.
While the present system is not perfect, we support the current direction and hope that direct income assistance can be provided until commodity prices improve rather than using loan adjustments. We believe that direct assistance is the best alternate for a long-term investment in American agriculture.
Mr. Chairman, we thank you for holding the hearings in Texas and allowing us to testify, and I will be happy to respond to any questions you might have, sir.
[The prepared statement of Mr. Patman appears at the conclusion of the hearing.)
The CHAIRMAN. Thank you, Mr. Patman.
STATEMENT OF RONNIE RIDDLE, COTTON PRODUCER Mr. RIDDLE. Mr. Chairman and members of the committee, thank you for coming to Lubbock, TX, to hear producers' thoughts on current farm policy. We appreciate your understanding on the need for an inclusion of those most effected by this legislation.
My name is Ronnie Riddle, and I am a cotton, grain, and livestock producer from Jones County, TX. My father and I farm together, and we derive our entire annual income from our family farming operation.
Today I am also speaking on behalf of Rolling Plains Cotton Growers, Inc., an organization of cotton producers who work together to improve the conditions of the industry. Our membership includes cotton producers throughout the 29 counties of the central and northern rolling plains of Texas where almost 1 million acres of cotton are grown each year.
It is our interest and purpose to provide new ideas and stimulate some innovative thinking for all future farm legislation, which in turn will affect all producers in this country, especially those who are from the rolling plains of Texas.
Our business is cyclical in nature with unpredictable and unavoidable ups and downs. Governmental assistance is greatly ap
preciated by producers and is essential for our survival from year to year when market or the weather events result in severe declines in income that endanger our financial stability.
We as producers again will be relying on emergency assistance this year. However, we are concerned that the additional appropriations will not always be available. This variation in producers' payments is a clear indication that the 1996 farm bill does not provide an adequate safety net to producers.
A long-term policy needs to be established that provides comprehensive protection to producers which continue in strengthening the vital partnership between the cotton industry and government. While certain risk management tools are available, they do not adequately protect producers from yield or price declines within a growing and marketing season. Also, these tools do not make up for declines from previous years' price levels.
We need legislation that will address extreme year-to-year variations, particularly those arising from international market events and weather-related losses. This legislation should include some form of payment for producers of all commodities who actually harvested a crop or who have failed acreage due to natural disasters.
We applaud the simplicity and flexibility in the current legislation and believe it should remain in any future farm legislation. However, any new legislation should be designed to address the problems of low prices and provide counter-cyclical relief to those producers and discourage distorted planting decisions.
We as producers encourage Congress to complete their efforts to reform the crop insurance program. Reform should include, first and foremost, stronger enforcement of compliance regulations to combat program abuse. Second, reform should include a provision that makes an adjustment in the actual production history and take into account the success of efforts such as boll weevil eradication.
We as producers have invested our money in this eradication program, but because of current regulations, it can take as long as 10 years for our insurance yield to reflect the eradication program success. It is essential that this remains a part of the final legislation.
Let me once again thank you for taking time to come hear what is on the producer's mind. You will be hearing a lot of folks talk about problems they are having with low prices, weather, and the absence of the safety net for agriculture. We hope, however, when you take our message back to Washington, it will help you formulate a suitable solution for the agriculture problems that we are all facing. Thank you.
[The prepared statement of Mr. Riddle appears at the conclusion of the hearing.)
The CHAIRMAN. Thank you, Mr. Riddle.
STATEMENT OF MARK WILLIAMS, COTTON PRODUCER Mr. WILLIAMS. Good morning. My name is Mark Williams. My son, Ryan, and I have a diversified farming operation near Farwell, TX, which is 90 miles northwest of Lubbock. We grow cotton, corn, grain sorghum, wheat, and run stocker calves.