system that reflects the reality that the small family farm is no longer the unit most likely to succeed in the long run. The trend is toward larger farms, and limitation of payments only forces unnatural structuring that is counter-productive. Second, the present price support structure does not provide adequate price protection to allow lenders a sound basis for financing farmers. Most operations will not cash flow at current commodity prices. Current support levels for most crops must be raised if farmers without self-financing are to secure operating capital. Third, more dollars have gone to non-active farmers than under past law, and that reduces funds available for the support of active producers. I do not suggest that non-active farmers should be entirely cut off from support. However, I do believe those that are taking risks, providing jobs, and producing goods for the_market should be given more assistance than those who are not. Perhaps a factored payment for non-active farmers would be better. Now there are some other items that I think we need to consider in general: Agricultural trade sanctions must be ended. Consider rice. At one time, the three largest importers of U.S. rice were Cuba, Iraq and Iran. Sanctions have not stopped these countries from getting rice, they have only taken our export markets away, and in all three countries the same leadership is still in place. American agricultural interests must not be traded away. No farmer or crop association can effectively negotiate against competing governments. We as independent producers, are dependent upon our government to represent us in international trade and we must be protected from unfair competition. Grades and standards have been misused to deprive farmers of rightful returns. An example of what I am speaking of occurred in 1998. Large areas of the country were hit with high levels of aflatoxin in corn. The price for a huge portion of the corn crop in affected areas was discounted, yet a great part of that same corn went right into normal market channels, including that for human consumption, as corn buyers manipulated and regraded the grains to receive full price for themselves. This process amounted to nothing less than preying on vulnerable farmers by buyers who reaped huge profits in the process. Another example is the recent case in Hunt's Point, NY where the misuse of grades was used to deny farmers full value for their goods. I am not suggesting that there is anything in the current law that encourages these activities, but I am saying that new laws should be much more active in eliminating these practices. Recently, a great deal of emphasis has been placed on crop insurance. Historically crop insurance has been a poor method to deliver support to farmers. This year for the first time, crop insurance is available that seems to offer a tool for reasonable risk management. But the problem with insurance is fraud. Each dollar paid out for fraudulent claims reduces the funds for legitimate claims and drives up premiums. Crop insurance will not work as a method of assistance to farmers unless a stringent program of claims adjustment is put in place and maintained. If crop insurance is considered as a major part of any new law, it will best be managed through FSA rather than through a private agency. In closing, Mr. Chairman, I would also add that we are here today largely because of the extreme financial stress that agriculture faces. I want to assure you and all members of the committee that every farmer you see that is producing efficiently for markets would rather live off the sales of commodities at profitable prices than to have any income from the government. Thank you, sir. [The prepared statement of Mr. Barham appears at the conclusion of the hearing.] The CHAIRMAN. Thank you. Mr. German. STATEMENT OF WILLIE GERMAN, COTTON PRODUCER, SOMERVILLE, TN Mr. GERMAN. Mr. Chairman, members of the committee, I am Willie German, a farmer from Somerville, TN. I appreciate the chance to address you today and present some of my concerns about the present condition of agriculture and my concerns about its future. Following high school, I enrolled as a student at the University of Tennessee at Martin, studying for a career in my chosen field of agriculture. My education plans changed immediately in 1977 when I learned that a large farm near home was going to be available for rent next year. My decision to leave school and pursue a dream of becoming a farmer was a difficult one but one that I have been comfortable with ever since. I have been able to grow the family operation from 150 acres to our present size of 7,000 acres, producing 3,000 acres of cotton, 2,500 acres of soybeans, 1,000 acres of corn, 540 acres of wheat, 300 acres of peas annually and producing 200 head of feeder calves each year. Today, my sons are 20, 17, and 6 years old. When I look around and see the deteriorating condition of the agriculture economy, I often wonder if there will be an opportunity for them to continue the family operation that those before them have worked so hard to build. Why do I wonder? According to USDA data, the January 2000 farm price for cotton was 43.1 cents per pound, up a mere 0.10 a pound from December 1999. January marks the fourth consecutive month that cotton prices have been below 46 cents a pound, a level not previously seen since August of 1975. University of Tennessee economists have established a break-even price for 2000 cotton production at 57 cents per pound. Barring disaster in the production areas of the country or some other unforeseen market impacting event, most economists predict very little, if any, improvement in these current price levels that are below the cost of production for even the most efficient farmer. I have seen neighbors that have farmed all their life decide that production agriculture is no longer in their future and they have placed their equipment, their land and their life on the auction block and have turned to other jobs to support their families. There is no one action that can be taken to end the economic crisis now occurring on the farms across this country. It will take a concerted effort on a lot of fronts to bring an acceptable level of profitability back to the rural landscape. Please allow me to address what I believe to be some of the major issues. As you know, agriculture consistently runs a trade surplus every year in this country, shipping more products abroad than we import. We are one of the few sectors of the economy that continues to contribute positively toward or Nation's trading balance. Exports are U.S. agriculture's source of future growth in sales and income. Global demand for food is expanding rapidly and more than 95 percent of the world's consumers live outside U.S. borders. Not only do farmers benefit from these exports, nearly a million high-paying jobs are created for U.S. workers. I think we must find ways to include trade talk dialog in order to achieve tariff equalization with our trading partners. Fast-track trade negotiating authority must be restored so that we can take advantage of every opportunity to resolve issues such as unfair tariffs, trade-distorting subsidies and other trade restrictive practices. Funding for export promotion and market development programs should be increased to meet promises made to farmers during the 1996 farm bill debate, and to build more markets abroad for U.S. grown farm products. One recent example of the positive effect of market enhancement programs is the reinstatement of step 2 for cotton last fall. As a result, since October of 1999, U.S. cotton export commitments have more than doubled to 6.7 million bales of cotton as of March 2, 2000. Export shipments are currently averaging almost 200,000 bales per week, which is nearly 50,000 bales more than needed to meet yearly export projections. In addition, we must resolve issues based on sound scientific evidence. A new obstacle to the acceptance of U.S. farm products is the worldwide concern involving GMOs. I agree with those that suggest that we probably should have originally identified this new science as generically enhanced organisms and maybe the acceptance by the general public would have been better. I think that all segments involved with this issue must use every avenue available to find answers to the concerns that some consumers are voicing. We cannot afford to lose processors that are major buyers of U.S. farm products due to the demands of small consumer groups using junk science as a basis for concern. We must allow sound scientific data to take precedence over unsubstantiated opinions or junk science in maintaining a policy for safe food and fiber in this country. This new technology is one of the greatest breakthroughs for the efficient production of food and fiber to come along in many years. The development of new varieties that can carry enhanced genes has allowed farmers to again increase their level of production efficiency and the acreage farmed. The positive environmental impact of these production changes is visible immediately. One final concern is the need to improve the crop insurance products to a level that encourages more farmer participation. I see the light has come on so I will try to end on time. Members of the committee, thank you again for the opportunity to address you today during this hearing. We have many issues in agriculture, which will need the attention of both Congress and the farming community. I appreciate the chance to share what I see as some of the most pressing issues where we need your assistance. Thank you very much. [The prepared statement of Mr. German appears at the conclusion of the hearing.] The CHAIRMAN. Thank you. And I just want to make sure that it is clear-I should have said this earlier I suppose-but that all statements in their entirety will be a part of the record. Mr. King. STATEMENT OF ALLEN KING, COTTON PRODUCER, BROWNSVILLE, TN Mr. KING. Yes, sir. Mr. Chairman and members of the House Agriculture Committee, I certainly do thank you for taking up your time and coming and listening to our problems. I know that you get tired or everybody saying what is bad about everything going on. My name is Allen King, I am a full time cotton farmer in Haywood County, TN. I am also chairman of the Tennessee Boll Weevil Eradication Foundation and I am chairman of the Southeast Boll Weevil Eradication Foundation, which has the responsibility for eradicating and controlling the weevils on this 5.5 million acres of cotton east of the Mississippi River. Now if it were not for my two sons at home on the farm, I might not have time to run do all this stuff that I am involved with, but I have got two sons that are full time farming with me. I have never seen in my 45 years of farming the financial situation of the farmers in my county as bad as it is now. On my farm alone, our per acre sales of cotton was only 38 percent of what it was in 1998. We had lower prices in 1998 and we had lower quality due to the drought in 1998. Basically this was because we had a lot of short staple cotton. I personally think that farmers do not have enough of a safety net in the Freedom to Farm bill as we have it now. We need to either have higher loan rates or a target price concept or something more realistic to our production costs. We are paying 2000 production costs and receiving 1970 pricing. All my life in farming, I have concentrated on production agriculture and I do not claim to be an agriculture economist and I certainly do not have a specific recommendation to you all now, except that the farmers need some kind of a safety net to be able to compete worldwide. Now I will get down to the boll weevil. Cotton farmers in west Tennessee, southwest Tennessee, are in their third year of the weevil eradication and are faced with a $36.80 per acre assessment fee. They voted upon themselves a full cost share program of $211 per acre for 7 years-that is the highest in the Nation-4 years ago, not knowing the economic situation that would be facing them now. We need badly to restore the 30 percent Federal cost share program which was stopped just before the west Tennessee eradication began. It stopped at the Alabama-Mississippi line. All of the Alabama farmers and back east of there got the 30 percent cost share. The farmers in northwest Tennessee, which I am in, will be the last acreage to begin eradication east of the Mississippi River and they will start a diapause program in August of this year. We hope and plan to use 10 ounces of malathion per acre, which is by far the cheapest and most effective chemical that we have to eradicate the weevil. 64-076 00-9 We were able to start up this program because of the $100 million FSA loan program. Were it not for this loan program, we would not be able to start up a program without the Federal cost sharing and the loan assistance. We sincerely request that the loan program be continued. As we understand it, it is primarily a nocost program to the Government due to the payback and to the nature of the program. Now I will get onto something that is a little bit more pleasant. One of the few pluses that the Tennessee cotton farmer has today is our Extension Service Program. You all have supported the Extension Service well. It carries out a scientific, non-biased evaluation of all the new GMO seed varieties based on actual field experience. Due to the high cost of seed and the tech fees attached with them, this gives the farmer the actual economic benefit of this new technology. Another one of the best programs that the Extension Service has conducted for us in the past decade has been the no-till practice that they have promoted for our highly erodible soils. With the emphasis in Washington on clean water, I think the continued increase of no-till acres in Tennessee is leading to cleaner streams and rivers. Last week the Haywood County Conservation Board had its annual meeting and had an environmentalist that worked for Nature Conservancy to give the program. He had been working for the past 3 years on the Hatchie River in west Tennessee. The Hatchie River happens to be the northern edge of our eradication zone. He said this is the longest free channeled river in the United States and one of the few left in the world. He has been studying the sedimentation and the quality of water in the Hatchie River. He presented slides of how the water has become much cleaner and the erosion of the banks a lot less. He credited no-till farming and the lack of soil preparation in the fall as the main factors. We can thank the Tennessee farmers for what they are doing to make our water supply cleaner. Thank you. [The prepared statement of Mr. King appears at the conclusion of the hearing.] The CHAIRMAN. Mr. Sturdivant. STATEMENT OF MIKE STURDIVANT, JR., COTTON, CORN, Mr. STURDIVANT. Mr. Chairman and members of the committee, I am Mike Sturdivant, Jr., a 5th generation farmer and I operate a cotton, soybean and corn farm with my family in Tallahatchie and Leflore Counties in the Mississippi Delta. We appreciate the committee scheduling an opportunity to meet and exchange ideas with you here in the mid-south area. First, it has been pointed out that the FAIR Act of 1996 has operated and functioned precisely as it was planned, but at the time that the bill was being written, there was almost unlimited world demand for U.S. agricultural commodities, and consequently commodity prices for every major commodity were strong. There was little emphasis placed on policy considerations which would be necessary for periods of extremely depressed prices and low market demand. Therefore, we must acknowledge that Congress has acted re |