lations fairly tight on what land you're allowed to set aside to prevent slippage, and that's one way you could control that and make it a little bit more meaningful. Thank you.

Mr. THORNBERRY. Thank you.

The CHAIRMAN. Mr. Stenholm had a follow-up question.

Mr. STENHOLM. Mr. Riddle, you, in response to Mr. Simpson's question regarding the increasing of the loan rate, stated a very interesting comment in which you said this year, by producing cotton, you were at a disadvantage over those who did not make a crop. And, therefore, increasing the loan rate would give you a more level playing field.

Would you expound? What did you receive for your cotton?

Mr. RIDDLE. I can't tell you the exact amounts right now. We're still getting payments. I'm in the pool program.

Mr. STENHOLM. If you had sold at harvest time?

Mr. RIDDLE. If I would have sold at harvest time, I would have received probably, at loan rate, would have been 50 cents, 48 to 50 cents; and, then that would have kicked me out if I had put it in the loan, so of the

Mr. STENHOLM. Were you insured?

Mr. RIDDLE. Yes, I was.

Mr. STENHOLM. If you had not harvested a crop, what would that cotton have brought you?

Mr. RIDDLE. Counting the disaster and the insurance?

Mr. STENHOLM. No, just counting the insurance.

Mr. RIDDLE. Sixty-two cents a pound.

Mr. STENHOLM. So, your incentive was to not harvest?

Mr. RIDDLE. That's the way the program seems to be set up at the moment.

Mr. STENHOLM. I appreciate you clarifying that, because that's the comment that I made earlier about our current insurance program in which we attempt to insure both price and yield with the same entity or the same policy or the same policy. It's making it very, very difficult.

And you make a very valid statement in which you, by harvesting, were put at a disadvantage; and, there are some that are asking that if we are going to insure it at 62

Mr. RIDDLE. I believe 63.

Mr. STENHOLM [continuing]. Then why isn't it worth the 62 cents for those that harvest it versus those that didn't harvest it? And that's a question that I think will come up in the conference on crop insurance this year as we look at this year's program as well as how we design the program for the future.

And I thank you for clarifying that.

The CHAIRMAN. I thank the witnesses very much for your testimony. And, as again, would encourage you, if there is additional comments, we would be happy to accept them.

I will now call our second panel to the table. Mr. Dale Artho, who is a grain sorghum producer from Wildorado, TX; Mr. Coby Gilbreath, who is a corn producer from Dimmitt, TX; Mr. Paul Hitch, who is a cattle rancher and feeder from Guymnon, OK; Mr. Henry Jo VonTungeln, wheat and cattle producer from Calumet, OK; and Mr. Tommy Womack, who is a wheat producer from Amarillo, TX.

I would remind our guests and our witnesses that the Committee on Agriculture broadcasts its hearings over the Internet. We have done that in Washington. We are taking that on the road with us. And it is being done here, and it will be throughout the 10 field hearings that we have.

I will just mention that our next set of field hearings will be March 17 in Memphis, TN, and March 18 in Auburn, AL.

And we would take the witnesses' testimony in the order they were introduced.

Mr. Artho, welcome and please proceed.

STATEMENT OF DALE ARTHO, GRAIN SORGHUM PRODUCER Mr. ARTHO. Mr. Chairman, members of the committee, welcome and thank you for this opportunity to testify. The gravity and weight of today's hearing does not escape me. This hearing is the beginning of a process that will determine whether I and many of my fellow producers will be able to continue our farming operations.

My name is Dale Artho, and our operation is located west of Amarillo. Production includes dry land and irrigated sorghum, sorghum seed production, wheat, corn, dry edible beans, and cattle.

Because of the drought of 1998 and low prices in 1999, I am in the process of refinancing land to meet my financial obligations and operate in fiscal year 2000. In my business, I expect to use equity in times of economic severity. And make no mistake, this can be a process of self-liquidation.

In preparing for today, I had to determine if this committee would demand that my profitability come from the global marketplace or stay the course of trying to achieve profitability under the present cheap food and fiber policy for U.S. consumers. The issues and solutions I would like to address today are ones we face as a result of this paradox.

I've had the privilege of traveling to South America, Asia, and Cuba on humanitarian food or trade missions and was an MGO delegate to talks in Seattle. This has reinforced my view that the United States must pass fast-track trade authority and lift sanctions. If U.S. farmers are going to be used as defense contractors for foreign policy, then agriculture should be compensated as our defense contractors.

I encourage you to help facilitate innovative methods that allow producers to vertically integrate into the marketplace, methods that help producers to be partners in the market and not price-tak

ers.

Due to consolidation in agriculture and diminished competition, anti-trust regulation and enforcement is critical. A program allowing commercial banks to provide packaging and grouping of guaranteed loans. If a guaranteed loan meets the strict requirements of the commercial banking industry, that bank would have the ability to group loans of similar risk and at different guaranty levels.

This would speed the process and create a partnership between banking, agriculture, and government. We urge you to ensure that sorghum is treated by the public research sector on a per planted acre basis equal to the same level as other crops in research programs.

We have experienced problems with inequities in the LDP rates. We should determine the LDP's by looking at the terminal market closest to a given county. Sorghum farmers in Colorado, Oklahoma, Kansas, New Mexico, and the Texas Panhandle experience a financial penalty because of the geographical distance to the Gulf markets. Documented market penalties have exceeded 30 cents per hundred weight.

Loan rates. USDA recently used their discretionary power to lower the sorghum loan rates. Such actions prompt producers to plant crops that do not fit the agronomic potential of a geographic area, increasing the Government's financial liabilities.

I believe it is environmentally irresponsible to use non-renewable resources to grow other crops on my farm, crops that will require more water, additional fuel, and higher levels of fertilizer, simply because Government policy appears to make other crops more lucrative.

To prevent possible abuse in insurance, the farmer-elected FSA county committee should become the gatekeepers for RMA to determine the insurance eligibility of a crop within their county. Olympic averaging should not be used on coverage above 75 percent. Disparity and inequities created by crop insurance should also be a priority. Sorghum is a low-risk crop, but I have seen lower rates charged to higher risk crops.

Payment limits must be removed and the use of certificates continued. If the logic limiting agricultural producers to a payment limit is valid, then why does the Government not limit doctors, lawyers, or defense contractors to the same levels? U.S. supply management policies will not keep foreign countries from bringing sensitive land into production, nullifying any attempts the U.S. Government might make at supply management.

Preserve planting flexibility, decoupled AMTA payments must be retained and increased. Does it not make more sense to keep food production on land that is already in production? All of my acreage is covered by crop insurance, but crop insurance does not provide capital to make land or machinery payments. Without the additional AMTA payments, failure would have been a certainty last year.

A financial safety net must be added. Payments from this safety net should be a supplement to the present AMTA payments and be paid only to those who produce an eligible crop on AMTA acres.

My ability to be a responsible steward of the land is determined by profitability. Without profitability, my ability to maintain sound conservation practices is greatly diminished. Environmental regulations not based on science diminish civic cooperation.

I hope to pass my land to my children. This is just one reason that I believe farmers are true environmentalists and are the first line of defense for our strategic food supply.

I also urge you to pass the farm accounts, eliminate the inheritance tax, the marriage penalty tax, and provide full deduction of all health care premium costs as well as eliminating taxes on capital gains.

Thank you. You have my sincere cooperation as you take on this enormous task, and I'll help you any way I can.

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

The CHAIRMAN. Thank you.

Mr. Gilbreath.

STATEMENT OF COBY GILBREATH, CORN PRODUCER

Mr. GILBREATH. Thank you, Chairman Combest, Ranking Member Stenholm, and the House Agriculture Committee members. Thank you for the opportunity to speak to you on agriculture issues concerning Texas farmers.

My name is Coby Gilbreath, I'm a farmer from Castro County, TX. Our family operates a farm where we grow corn, cotton, wheat, and cattle 80 miles northwest of Lubbock.

Through financial analysis, I know that I'm an efficient farmer. Our family farm is financially sound in areas of debt management and repayment. We're good marketers, good risk managers, using all the tools available to lessen those risks. But after having done what appear to be all the right things, without your assistance, our operation wouldn't have paid out.

I want to thank each one of you for the additional ad hoc type monies that you approved in 1998 and 1999, my lender thanks you, as well as the small businesses in my town. Again, I thank you very much.

Mr. Stenholm, you'll notice I cleaned up my remarks from the Agriculture forum in Waco somewhat, so that brings us to today. The Federal Agriculture Improvement and Reform Act of 1996, known by many as the FAIR Act or Freedom to Farm has indeed provided producers with more freedom. Farmers are now able to base their crop plans on environmental stewardship and the marketplace.

I believe that the environment and economic benefits justify continuing planting flexibility and the freedom of the FAIR Act. However, farmers know and realize that there are deficiencies in the safety net. Personally, I would enjoy an increase in the loan rate. But as a member of the link in the chain of agriculture as an industry at a whole, I realize how difficult that is to accomplish and facilitate to the entire industry.

The supplemental income payment, or SIP, as proposed by Congressman Stenholm merits consideration. However, one problem associated with the SIP proposal is that the payments are based on a national formula. Farmers involved in regional or localized crop disasters would not be protected if growing areas in other areas were not affected.

This could be remedied by basing the formula on the NASS, or National Agricultural Statistic Service reporting districts or on county level. Lengthening the 5-year average in the proposal to 7 or 10 years on the price side might also help.

The administration's proposal referred to in the coffee shop at SIP lite, because it's less filling but tastes great and provides a third less substance, lowers the payments toward the limits and combines the proposed SIP program with the AMTA payments and targets mostly lifestyle farmers with off-farm jobs. Furthermore, it does little, if nothing, to remedy the problems and situations addressed in this testimony.

The flexible fallow proposal deserves discussion also. Some have several concerns about flexible fallow such as potential to encourage overproduction, the impact on end-users, and that growers would hit the LDP payment much quicker, causing forfeitures to the Commodity Credit Corporation. If these concerns are addressed, this voluntary program might fit well with the current farm bill to provide a level of counter-cyclical support.

There are some other issues that affect the new farm bill's legislation and the success of it. Crop insurance reform, that's been brought up very many times today. The worst case scenario was for producers to produce one-half the normal yield. The best case was to grow a better or normal crop. That way, you got more back from the safety net in terms of LDP. We appreciate the leadership on the House Agriculture Committee in the passage of the first phase of crop insurance reform. It is now time for the Senate to act.

Second would be the CRP program. It should be maintained at the maximum enrollment, taking fragile lands out of production and helping protect our Nation's streams and rivers.

Third, the production of ethanol for fuel. Using ethanol would improve air quality and would consume an additional 600 million bushels of corn annually, adding approximately 35 cents to the value of every bushel of corn. Congress should also oppose efforts to waive or eliminate the oxygenate requirement in gasoline.

Fourth, overregulation, it attacks us from every facet, raising the cost of producing, manufacturing, and distributing goods and services. The costs of our inputs are always going up. We in production agriculture have no one to pass our costs on to.

Trade, we have the opportunity to extend permanent normal trade relations to China. It is now time for two-way trade, time to open their markets to our agriculture products.

There are two issues concerning LDP eligibility. Currently crops in pasture form are not eligible for LDP payments. Producers should not be penalized for making decisions to add value to crops through livestock grazing. The decision to graze would better promote flow and movement of these crops through the market. Isn't that what the LDP was developed for, to keep commodities moving through the market and not in the loan?

Second is aflatoxin. Corn should be eligible for the loan and LDP as long as aflatoxin levels are below 300 parts per billion. The crop insurance program should indemnify any producer with corn exceeding 300 parts per billion.

Gentlemen, our Nation enjoys a cheap, abundant, safe supply of food. Oh, we support cheap food for the American consumer, but the American farmer must be compensated for his management, labor, capital, and risk. We need payment limitations raised to more accurately represent the size and scope of production agriculture. At the very least, the limit should be maintained at the current level.

In summary, we support current planting flexibility with a better safety net, it's too early to endorse a specific plan, but we feel both the SIP, proposed by Congressman Stenholm, and the flexible fallow plans deserve further study. We support increasing the payment limits as not to punish production agriculture for its efficiency.