TESTIMONY OF MIKE STURDIVANT, JR. Mr. Chairman and members of the committee, my name is Mike Sturdivant, Jr. and I operate a cotton, soybean, and corn farm with my family in Tallahatchie and Leflore Counties, MS. We appreciate the committee scheduling an opportunity for farmers to exchange with you in the Midsouth area. First, it should be 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 the Congress has acted responsibly 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 40-year lows for corn, soybeans, cotton, rice, and wheat. For purposes of highlighting some of the most critical issues in current farm policy which we hope to get special consideration, I would like to submit the following: 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 marketing transition adjustments since enactment of this measure in 1996. The transition adjustments in 2000 are almost half the amount of the 1996 level, and this is causing grave hardship on the farm during periods of low prices. At a time when every land-grant University economic model is pushing farmers toward larger, more efficient equipment, and expensive harvesting 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. • 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. 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 these loan caps; however, if there are overriding budget considerations associated with the removal of the loan cap, Congress should review this in the context of its comparison to other mechanisms for maintaining farm income while insuring that the CCC loan serves as a tool for orderly marketing of commodity stocks. Significant agricultural subsidization continues among our World trading partners and therefore, the U.S. 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 our farmers, but in order for the U.S. farmer to compete, the Congress must continuously remind the administration and USTR that a heavy price will have to be paid out through the cost of domestic farm policy if they do not carry out trade agreements in a way which reflects reciprocal enforcement. In the interest of income stability for U.S. rice farmers and market demand, P.L. 480 and other export assistant programs should be extended to the export of rough rice, as well as milled rice. • 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 benefited significantly from the CRP and WRP programs, and we emphatically endorse their continuation. The 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 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 an effective risk management tool for southern agriculture. We applaud the work being implemented by the House committee and we stress that the 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 the 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 get 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 year 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 midsouth and it completely ignores existing USDA cost-price data which leads us to larger farming units. REVIEW OF FEDERAL FARM POLICY SATURDAY, MARCH 18, 2000 HOUSE OF REPRESENTATIVES, The committee met, pursuant to call, at 10:00 a.m., in the Auburn University Hotel and Conference Center, Auburn, AL., Hon. Larry Combest (chairman of the committee) presiding. Present: Representatives Everett, Chambliss, Moran, Riley, Simpson, Stenholm, Bishop and Berry. Staff present: William E. O'Conner, Jr., staff director; Alan Mackey, senior professional staff; Wanda Worsham, chief clerk; Christopher Matthews, press secretary; Hunter Moorhead, legislative assistant; Pam Scott, legislative assistant; Christy Cromley, legislative assistant and Vernie Hubert, minority counsel. OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS The CHAIRMAN. Good morning. I want to thank everyone for coming, and welcome to this third of 10 hearings that the House Agriculture Committee is holding in different regions of the country. I want to thank everyone here for coming to this important event. We were in Lubbock, TX 11 days ago and Memphis, TN just yesterday. The time we have spent in the first two hearings has been quite profitable both for the members and the audience, and I am confident that the time that we spend here today will be no less valuable. I have the pleasure of introducing seven other Agriculture Committee members who are with us this morning. I am Larry Combest. I represent the High Plains of Texas. On my right is my good friend and neighbor Charlie Stenholm, who is also from west Texas. Terry Everett, I'm sure many of you know, represents the folks in southeastern Alabama. Saxby Chambliss has the district covering central and southern Georgia. Jerry Moran represents the western two-thirds of Kansas. Bob Riley's district is here in eastern central Alabama. Sanford Bishop is from just across the border in southwest Georgia and Marion Berry represents a district in northwest Arkansas. Today we plan to hear from 17 people who have built their life around the industry of agriculture. We have sought to bring folks representing the different types of agriculture in the central region of the United States and representing a variety of thoughts on the issues facing our industry. It is my hope that everyone in this room can identify with at least one of our witnesses today. And we are encouraging anyone who would wish to submit written testimony, or additional testimony, it will be a part of the record and it will be weighed as heavily as those people who happen to give verbal testimony. I would remind our witnesses that we are doing a live audio feed through our Web site, as we do in all of our Washington hearings, and as we are doing in our field hearings. I do not want to speak long because I want to emphasize that we are hear to listen to you. But I do want to say that I think all the members at this table know that we have a problem in agriculture. What is more, we all fundamentally believe that it is in the best interest of this Nation to maintain and foster a diverse and strong agricultural sector for the future. So the question_we want to answer today is how can we do that best. We want to find out what real producers think is working and what is not working in our current Federal farm policy. We will be going to all regions of the country asking the same questions and hope that we can find a consensus among producers for farm policy changes that you need. Again, I want to thank everyone for attending this hearing today, and our witnesses for taking their time. I would like to recognize Mr. Stenholm for any comments he would like to make. OPENING STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Mr. STENHOLM. Thank you, Mr. Chairman. It is good to be back in our colleague Terry Everett's district and area, and it is good to be in Alabama again. I would just make one comment, building on what the chairman said, to all of our witnesses and to everyone that will be submitting record. We know how bad it is. We are not out here to learn how bad it is, because we know no matter what region, what commodity, we have very serious problems. What we are looking for is solutions and we are looking for those solutions, and we pick them up bit by bit from ideas that you submit as to how you would in fact propose solving the problem for whichever commodity or livestock or poultry industry concern that you might have. What our challenge is is the 51 of us then to take those ideas and put it together in legislative form that can get 218 votes and 51 votes and a Presidential signature, region by region, State by State, commodity by commodity. That is one of the real pluses of this hearing. I commend the chairman for this idea of taking the full committee into 10 regions of the country, 10 States, for purposes of gleaning this information from those who produce. That is what it is all about. We thank you very much for your attendance today and for the witnesses and the testimony that will be forthcoming. The CHAIRMAN. Mr. Everett. OPENING STATEMENT OF HON. TERRY EVERETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA Mr. EVERETT. Thank you, Mr. Chairman. I would like to first start by thanking you for holding this Agriculture Committee hearing in Alabama. This is an historic occasion not only for Alabama, |