sponsibly and with significant conviction in the passage of two emergency disaster relief measures during the 1998 and 1999 harvest season, at a time when commodity prices were hovering at 40year lows for corn, soybeans, cotton, rice and wheat.

For purposes of highlighting some of the most critical issues in current farm policies which we hope to get special consideration, I would like to submit the following:

1. Should the delivery mechanisms for income support be maintained and extended as currently designed in the FAIR Act, the Congress should carefully evaluate the sharp decline which has occurred in the agricultural market transition adjustments since the enactment of this measure in 1996. The adjustments in 2000 are almost half the amount of the level in 1996 and this is causing grave hardship on the farm during periods of low prices.

2. At a time when every land grant university economic model is pushing farmers toward larger, more efficient equipment and expensive harvest equipment, the arbitrary limitations on market transition adjustments and marketing loan gains continue to pull in an opposite direction. The current market oriented farm policy which relies on a cost efficient family farming operation does not point toward a family farming operation targeted toward a smaller size.

3. The planting flexibility, marketing loan and payment base and yield provisions tied to historical averages are components of the FAIR Act which should be maintained.

4. The CCC non-recourse loan is fundamental to the success of any farm program. The current formula is operating as designed with the exception of the loan caps. Careful study should be given to removing those loan caps. However, if there are overriding budget considerations associated with the removal of those loan caps, Congress should review this in context of its comparison to other mechanisms for maintaining farm income while ensuring that the CCC loan serves as a tool for orderly marketing of commodity stocks.

5. Significant agricultural subsidization continues among our world trading partners and therefore, the United States should not unilaterally disarm by phasing down domestic farm programs. In foreign trade matters, our orientation as a country has been designed to open up trade. However, sophisticated trade barriers and other practices administered by many of our competitors in developing countries have resulted in exemptions and waivers from many of the WTO rules. NAFTA, CBI parity legislation, and normal trade relations with China are viewed favorably by the farmers in my area. But in order for the U.S. farmer to compete, Congress must continuously remind the administration and USTR that a heavy price will have to be paid through the cost of domestic farm policy if they do not carry out trade agreements in a way which reflects reciprocal enforcement.

6. In the interest of income stability for U.S. rice farmers and market demand, P.L. 480 and other export assistance programs should be extended to the export of rough rice, as well as milled rice, as has been mentioned earlier.

7. The Conservation Reserve Program and the Wetlands Reserve Program are valuable programs as an alternative for the highest

and best use of land that can also bring environmental benefits for the public purposes provided by this program. Our region of the country has benefitted significantly from the CRP and WRP programs and we emphatically endorse their continuation.

Congress should carefully study proposals aimed at authorizing the expansion of CRP and WRP, so that the growth of these very positive conservation programs do not carry the unintended consequences of causing budget offsets in other vital entitlement programs such as nutrition and domestic farm programs. These programs must be funded under the same mandatory spending accounts as CRP and WRP and any plan for the expansion of these programs should include provisions that ensure that other entitlement spending will not be adversely impacted.

In the area of crop insurance, there is little support in our area among farmers for this program to serve as a delivery mechanism for domestic farm programs. Crop insurance has not been as effective as it needs to be in terms of serving as a risk management tool for southern agriculture. We applaud the work being done by the House committee and we stress that Federal involvement in crop insurance should be sharply focused on those elements of the policy which extend the farmer a low-cost insurance product to protect against disastrous impacts of reduced income due to lower than expected yields. The farmer does not need for USDA to continue extending huge amounts of resources on overhead in order to be an insurance product to the farmer.

In conclusion, we are encouraged that the administration's budget request included funds for additional agricultural assistance, but we would caution that it is not likely that the administration's proposed assistance will be enough if prices remain low and we experience another crop like 1999. Further, I strongly disagree with the emphasis placed on arbitrarily targeting domestic farm program benefits to operations on the basis of their size. This approach flies in the face of the vast majority of farm balance sheets throughout the mid-south and it completely ignores existing USDA cost-price data which leads us to larger farming units.

I appreciate the opportunity to appear before you today.
Thank you.

[The prepared statement of Mr. Sturdivant appears at the conclusion of the hearing.]

The CHAIRMAN. Thank you. Ms. Winters.

STATEMENT OF DONNA WINTERS, COTTON, CORN, WHEAT PRODUCER, LAKE PROVIDENCE, LA

MS. WINTERS. Mr. Chairman, members of the committee, I appreciate the opportunity to come before you today. My name is Donna Winters and my husband and I farm about 3,200 acres of cotton, corn, soybeans, wheat, milo in East and West Carroll Parishes, LA. We are both third generation farmers in our respective family farms and I guess you could say our consolidation occurred when we got married. We had two family farms that were combined. But again, I thank you for the opportunity to share my views today.

I also want to take this opportunity to thank you for the emergency relief provided these past 2 years. This relief was a great benefit to producers of all commodities and your action helped

stave off many potential bankruptcies and we are greatly appreciative.

As I look at the situation, it seems to me we have two separate problems. The first one is a short-term problem and that is how do we get through another year where commodity prices are below the cost of production. And everything that I read says barring disaster and barring a weather, insect or disease disaster somewhere else in the world, that this year prices will continue to be below the cost of production. And this will necessitate growers going to Congress again asking for another financial assistance package, hopefully one structured like the one you delivered last year.

The longer term problem and the more challenging one that has been addressed all day today is how do we address long-term farm policy.

I really believe in my heart that the next farm bill that you enact will determine the future of agriculture in America. I do not envy you your position, because you have some very difficult decisions to make. I do not think we have ever had a farm bill, start talking about a farm bill when agriculture has been, in my lifetime, in as much crisis as it is today.

But my first concern when you look at long-term policy is budgetary. Congress must be willing to allocate enough budget authority to fund a workable farm bill. The remaining budget authority at the end of the FAIR Act of $4 billion is just grossly inadequate and it does not matter how good our policy is if we do not have sufficient spending authority, it is really of little good.

Generally speaking, cotton farmers in Louisiana like some aspects of the FAIR Act. We like the flexibility that has been discussed by everybody here today, we like the marketing loan being keyed to the world price for cotton. Most producers that I know would welcome an opportunity to remove the budget caps that were placed on cotton-I mean on the loan, early on. We also like the 3-step competitiveness provisions and that it has helped keep U.S. cotton price competitive to our customers.

As has been discussed, the most glaring weakness is the FAIR Act's inability to provide adequate income protection when prices are very low. And I hope when Congress begins serious deliberations, you will address this low-price safety net. Longer term policy is much preferred to the uncertainty of emergency relief packages and our lenders are reminding us of this fact as we seek production financing this spring.

In discussing how to strengthen the safety net, many issues have been discussed among the farm groups. We have looked at whether farm program benefits should be coupled or decoupled, and the pros and cons of fixed benefits versus price or income related benefits. It appears though that some combination of fixed, decoupled payments, together with a coupled counter-cyclical payment could have the most merit.

A most disturbing trend is the mindset of some policymakers to put even greater limits on farm program benefits through means test, reduced payment ceilings or other forms of benefit targeting. Payment limitations are counter-productive for American agriculture and every American citizen. Commercial size family farm operations in the United States need Federal assistance, primarily

because they face highly subsidized competition in the global marketplace. There is no data to support the conclusion that large farms do not need assistance because they are not under the same financial stress as smaller farms. Unless the United States is willing to sacrifice its agricultural production base to foreign subsidies, we must have farm programs that enable commercial size farming operations to enjoy a reasonable partnership with our Government. Mr. Chairman, we applaud your efforts in shepherding a meaningful crop insurance reform measure through the House of Representatives. We, like you, want an improved product. However, we strongly belief that crop insurance should not be used as a delivery mechanism for farm program benefits. We believe it should be a separate production loss risk management tool.

In summary, from my perspective in Louisiana, there are a few adjustments I would like to see made:

We need a better safety net to protect farm income when prices are low.

We need at a minimum continuation of the adjustments made in 1999 to permit commercial sized farming operations to participate more fully in farm program benefits.

And we need an effective crop insurance program for insuring production losses.

Thank you for the opportunity to share my views.

[The prepared statement of Ms. Winters appears at the conclusion of the hearing.]

The CHAIRMAN. Thank you very much, Ms. Winters.

I would like to just make a couple of general comments. One, thank you all and all of the panelists for your participation today. Mr. Stenholm has made reference a number of times to the fact that the idea of the 1996 farm bill was that it was the last farm bill and that was very definitely a consideration and discussion of some people. I have told people all along, that was never part of the deal with me.

Mr. Stenholm or I one intend to be chairman of this committee when this farm bill comes for review and I cannot speak for Mr. Stenholm, even though I think I can, there is going to be another farm bill. I do not know what it is going to be.

I have been around through a whole bunch of them for a whole lot of years and we did not know the next year, as I had mentioned, Mr. Stenholm and I were here for 1985, 1990, 1995 and we never know what it is going to be the next time. We start gathering information and that is part of what we are doing, but there has got to be an agricultural policy. This country cannot move away from an agricultural policy.

Second, on the idea that you were talking about, Ms. Winters, you probably stressed this more than anyone else in the testimony, we do have two problems; one is short-term and the other is longterm. And long-term is developing markets and doing all of those things that we can. The short-term is trying to make for sure we still have farmers around to take advantage of it when it finally turns.

Twenty-one members of this committee went to Seattle to the WTO talks. I commend and have publicly and privately Charlene Barshefsky's tenacity in standing up for American agriculture.

There was a proposal on the table in which we just simply wanted-the American position was that we wanted to begin the discussions of the total elimination of export subsidies. There was a number of things that fell apart at Seattle, but that was one of the agreements that was not able to be reached.

It was my opinion at that time and I made a statement that reflected that, and it continues to be, that I do not want us to enter a bidding war for world trade. But if we cannot begin to have an agreement by those country that so highly subsidize their exports, so much more than we do, to begin to look for the elimination, then the position that I have taken is that we should look at every possible tool that we have on the books today and any possible tools that we can potentially put on the books that if in fact we do have to enter into a bidding war internationally in order to make for sure that our farmers are not left behind, that we want to make for certain that they have every possible tool that they can and they have got plenty to back up their bidding efforts. And if there is going to be a trade war in the world-and I think it would be terribly devastating if that is the case-but unless we can get some other countries to agree to change their policies, then I think we need to change ours and become much more aggressive in making for certain that the American farmer is represented equally in world trade.

Mr. Stenholm.

Mr. STENHOLM. Mr. Chairman, you can and you did speak for me in your earlier statement. I associate myself with your remarks.

Ms. Winters, you as well as several other witnesses today were acknowledging that we are trying to do two things with crop insurance and there is a growing belief it cannot be done. You cannot support price and yield insurance with the same policy, without getting into problems, and we are seeing that, cost, et cetera. And therefore, you will not hear today, but there was testimony presented to us today and there was also presented at the Lubbock hearing concerning one of these thinking outside the box proposals now that is being developed by the farm credit system and many of our State departments of agriculture have participated in this. And you very soon, through various producer commodity organizations as well as all others interested in this will begin to see this recommendation. And I would encourage you to look at it as quickly as you can and then make a reaction to it.

It is a proposal to insure cost of borrowed inputs and it is something that is catching a lot of interest now and we are going to have some good information on that, to see whether it has merit for the future.

I want to ask before my time expires the same question of you I have asked of every witness. Do you support permanent normal trade relations with China, as well as lifting all unilaterally imposed sanctions on food and medical products?

Mr. BARNUM. The answer, Mr. Stenholm is yes, if it is on an economic basis and not a political basis. And I would also favor trade, not just with China, but with Cuba and Iraq and Iran and all other countries, as long as it is done on a straight-up economic basis. Mr. GERMAN. Yes.

Mr. KING. Yes.